Any unpaid cash (debt) owing by one business to another is referred to as commercial debt.
Business-to-business (B2B) debt collection, also known as commercial debt collection, is a financially sustainable service provided by knowledgeable firms to help businesses recover and collect unpaid invoices and outstanding debts. A third party performs the function of collecting commercial debt on behalf of enterprises.
Commercial debt recovery is the process of obtaining unpaid invoices from a person or company that is compelled to pay them. The standard process to recover such debts is governed by the Late Payment of Commercial Debts (Interest) Act of 1998. (the Act). It is possible to increase the amount recovered from the non-paying party when a payment is made after the due date and the contract is covered by the Act by adding claiming interest and debt collection fees.
When is a payment considered past due?
The payment is regarded as being 30 days past due under the Act if a specified payment deadline was not agreed upon by the parties upon delivery of the commodity or service or upon receipt of the invoice by the buyer.
The Act generally requires that a payment be paid within 60 days of the date on which payment is to be made. It's deemed late at that moment.
How to handle late payments?
Your company is entitled to payment under the law within 30 days of receiving an item or service. You have the legal right to request assistance from a third party with debt recovery. You can start collecting unpaid invoices once the agreed-upon credit term has passed.
When a payment is past late, you may also collect interest and debt recovery costs in addition to the unpaid invoice. Unless the parties' contract stipulates an alternative rate of interest that is to be applied to any outstanding invoices, interest may be recovered under the Act at a rate of 8% plus the Bank of England base rate.
The Act also allows for the payment of debt recovery costs, which, in some circumstances, may effectively offset any legal costs incurred throughout the debt recovery process. In addition to the required late payment compensation, this also covers any necessary debt recovery fees.
There is no requirement in law that your debtor is informed of the usage of third-party services. However, informing them can result in faster payment. Because the agency will recoup its costs from the debtor via the late payment charges instruction, working with a debt collection agency sometimes includes no additional costs for you.
When is the right time to instruct third-party assistance?
A specialised business debt collection agency is used by businesses:
When invoices are being ignored.
Every time your team contacts the business debtor to request payment, they simply refuse to pay and have a long list of justifications ready.
If you learn the debtor has relocated and is no longer conducting business from the trading address.
Whatever situation you find your invoicing department in, our team is experienced and trained to handle it all.
What’s more, outsourcing your commercial debt is cost-effective as you no longer spend time and money chasing bad payers.
To talk about your company's needs for debt recovery.