Debt collection is a skill.
You don’t have to be an accountant to be good at credit management.
23rd October 2017.
In June last year one of CPA members, a subscriber to the Credit Protection Associations PAID (Payment Against Invoiced Debtors) service – a normally prudent and well established accountancy firm – took a reckless decision.
They granted credit of nearly three thousand pounds to an insolvent limited company which had a negative net worth ,and a cash flow deficiency of £34 000.
Soon after the invoice was raised Companies House initiated strike off action which later withdrawn, but not surprisingly, the debtor had a zero credit limit.
Of course, accountants work within a highly competitive market and often have a pretty special relationship with their clients. However this particular case was a little extreme.
How the CPA (PAID) service helped
Undaunted, our member approached PAID asking whether we would purchase the debt. We agreed to do so on a with recourse basis where the credit risk remains with the member but PAID absorbs all collect costs, including , if necessary, the costs of litigation.
There cannot be too many debt services companies in the country that would provide service on this basis, but the Member is loyal and well regarded and we wanted to help.
The debtor was approached politely but firmly and a repayment plan was agreed. Given the parlous financial state of the company, in collaboration with our member we accepted an arrangement for scheduled repayments of £150 per month. All too often debtors renege on such arrangements quite early on.
Debt collection is a skill.
The secret is to make a monthly call and remind the debtor of their liability. The debtor needs careful management. This has been done on this occasion and our Member has been paid £2100 thus far.
PAID is confident that the balance will be collected and the debtor is grateful for the way in which the matter has been handled.
We of course recommend that our members regularly credit check their clients and then stick to our recommended credit limits but we are happy to help. However CPA is happy to use its skills on its members behalf in even the most difficult of cases.
If you want to know more about recourse debt purchase please email David Hawkins at d.hawkins@cpa.co.uk and he will explain how recourse debt purchase can benefit your business – whether you are an accountant or not.
David Hawkins, Commercial Manager, CPA PAID.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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What can CPA do for you?
Read our blog – The Hidden cost of slower payers.
Read Our Blog – How to overcome common excuses for non-payment
Read our blog – Debt collection agency
Read our Cash Flow Advice
Read about our overdue account recovery service
Read our blog – What is credit management?
Read our blog -What is a credit management company?
Read our blog -Credit Management that works!
Read our blog – How to select a debt collection agency
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