Solicitors versus Debt Recovery

Hi All

I was wondering what the school of thought was on using a solicitors or a debt recovery company to collect unpaid invoices, which do people think is more effective and why?

Amy

I luckily haven't yet had to go down this route but I'd imagine it's for two reasons:

a) You wouldn't have the hassle of doing the chasing yourself any more.

b) The "scare" factor. It's much more serious having the letter go from a solicitor than from you chasing the money.

Hi Amy,

We provide invoice finance and our factoring product incorporates a credit control services. Some of our customer have came on board for this specifically rather than for the cashflow help.

Their thoughts tend to be that

1) It frees up the time of managers / salesteam to go out and get new business rather than chasing up money for things that are already done.

2) Having a professional cresit controller can help get your customers paying that bit quicker. In essence they should really be bringing down you days outstanding.

I agree with Liz in that a letter for a legal firm can scare them into paying but it can be a very expensive service if done on an ongoing basis.

Hope this helps!

Jo

Yes I can see where you are coming from Liz, however, I think these days most companies are immune to "red letters" from sols or DCA's like oursleves, what people dont like is being pinned down on the phone from feedback from our collections team, they tell me that most companies would prefer to sort things out without going down the legal route and solicitors obviously have a vested interest in commencing legal process as this is where they make their money, so I think in paticular that they are not too pro-active on the picking up the phone side of things and speaking to the debtor company.

Good point Joanna,

Using solicitors letters can get very expensive on an ongoing basis like you say, plus if the debtor does happen to pay just on the receipt of a solicitors letter i wonder what sort of fees their clients incur then? Most DCA's work on a no win no fee basis so they are more motivated to get your monies in as if they dont then they dont get paid, simple!

A good credit control or debt collection service, such as GRD Credit control services, is the best way in my book. Very effective results and less expensive than a solicitor.

Solicitors are more expensive for a reason - they're effective!

Sorry Guys I don't want to tread on anyones toes but have you tried Googleing 'money claim online' Amy.

There is a very good help desk and it is relatively straight forward.

Don't forget you can claim interest and compensation , google 'The Late Payment of Commercial debts (interest) Act 1998'

remember to keep a record of everything and don't delay.

good luck

Hi Amy,

Getting back to your original question: Bad payers tend to ignore their creditor's reminders. Letters or calls from a third party (Solicitors or Debt Collection Agencies) convey, to the debtor, the message that you are serious about recovering your money.

You have all the options laid out above, including the DIY option, if you have the time.

Why not concentrate on your own business and let the experts do what they are good at.

DEBT Recovery EVERYTIME,

Try Thornbury collections on here they can help

we carry out Vehicle Asset Recovery and we use Diane Cooper who is shall we say FIRM and straight to the point therefore every vehicle that is spotted is collected WITHOUT FAIL

So i would say Debt Recovery agent who knows what they are talking about, to get what your owed

Good luck

Steve at Thornbury is highly regarded try him

How do you work that out?

Solicitiors are good at sending letters, letters, letters......ad infinitum. You are not debt collectors and you have no interest in helping or preventing debt. Your profession is all about making as much money as you can out of a scenario and you know damn well you are not effective where collecting debt is concerned. So stop chatting rubbish and get back to leaning on your chair happy in the knowledge that you learnt a few ancient laws, qualified and can sit on your laurels and charge 65 quid for a standard letter you wrote once when you qualified that will be regurgitated for the rest of your working days.

Whilst I may be shooting myself in the foot by saying this, if your debt is under £5000, you are probably best advised to use the DIY option (although you may well take the view that it is still worth paying a modest fixed fee to a friendly experienced solicitor like me (!) to save you the time and hassle).

If your letters and phone calls are having no effect and you want to "up the ante" with a strongly and professionally worded threat letter from a solicitor, I will do this for a very modest fixed fee and I have numerous clients for whom this one letter has produced the payment they had been pursuing for months - money well spent!

Like it.

Kev

Ok fair play, so what happens when the debt is disputed? Do you mediate? Do you tell your client how much it is going to cost for you to pursue and what their chances are of winning a court case? Do you actually credit check the company you are pursuing to see if they are financially in trouble and whether or not they can actually pay because no court in the land can make someone who has no money pay a debt. I am not having a dig at you. Your response was honest and well thought out and you have presented your case very well unlike the other idiot who just said that CATEGORICALLY solicitors are more effective, I beg to differ although it would also be wrong for me to say CATEGORICALLY they dont work. I just cant abide solicitors who drag a case on when it's quite obvious their clients debtor wont pay and believe me I have seen it happen to clients when I was in the business. One client of mine paid loads of fees and didnt get a result, that's because the company was in financial difficulty and the solicitor concerned had either not bothered checking if they could financially pay their clients debt or just couldnt care less whether they got a result or not as long as they stuffed my client over for fees.

I could go on and on. I could chat all day about methods of collection, how people can minimise the risk which is really what they should be focussing on once they find themselves in a sticky place with a client. But I wont, I dont need to use the forum as a sales pitch any more but I was always really passionate about what I did and genuinely cared for the people I worked with and I was honest. The thing most people dont realise is that collecting a debt is easy as pie if there are no disputes, most debt collection companies dont even discuss this part and they certainly dont ever admit on a public business forum that if the debt is disputed their 'no collection, no fee' philosophy suddenly grows wings and flies out of the window. I also doubt very much they continue to work with the client or mediate with their debtor like I used to, that takes time and skill.

Here is a blog I started before I became bored of writing what was in my head but there are, I think, some good tips here to help you all be as debt free as possible.

http://15milliondollardebtcollector.blogspot.com/2008/09/10-ways-to-cripple-your-business.html

I dont do debt collection any more but being the good hearted little soul I am, I will share a bit of my wisdom etc etc because there was really no point me being in this field for twenty years if I cant still maybe help one of you!

The blog is incomplete and does not cover all the topics I could do but anyways.........

Oh and the title is such because at the time of writing I had estimated that the figure was as near as the amount of debt I had collected over the years as possible and dollars sounded better than pounds.