UK Commercial Debt Collection Processes

Mismanagement of funds, lack of capital, poor cash flow management and poor financial planning are some of the major reasons why businesses fail all over the world. While some may be lucky to get debt financing either from investors or financial institutions to salvage the situation or enhance their operations, others may not be as lucky. This is especially so for those businesses that have a poor credit score and history. 

UK Commercial Debt Collection Processes

When businesses fail to honour their financial obligations, their financiers may opt to use the services of debt collectors to recover their money. debt collectors are licensed individuals or firms that engage in legal recovery of amounts owed by businesses or individuals. The UK commercial Debt collection process is governed by different laws in order to safeguard the interests of all stakeholders while upholding their legal rights. 

Once a business fails to uphold their repayment schedule and all efforts by the financier to recover the money amicably have failed, they may opt to contact a debt collector for assistance. The debt collector will then contact the business through structured letters, emails and calls. If the business responds a repayment strategy is negotiated and monitored closely by the debt collectors. However, should this not suffice, the debt collector then initiates legal action on behalf of the financier. The courts then decide whether the financier is justified to pursue the debt and if so allows enforcement measures, that may include liquidation, to be taken against the business to recover amount owed.

Debt collectors charge a percentage of the amount recovered. There are some that may not charge if the money has not been recovered but there are others that adopt a different approach. If you want to seek assistance from debt collectors, it is paramount to confirm the details of the engagement beforehand to prevent adverse situations.

Importance of Credit Reform

Credit reforms are necessary for improving effective use of credit resources in a state, implementing better credit policies and increase the prosperity of businesses and the state. These reforms ensure that business, of all sizes and types, have equitable access to credit facilities, that financial institutions and creditors are protected against unwarranted losses and that the government provides an enabling financial environment for business prosperity.

As such, a multi-disciplinary approach is necessary for these credit reforms to have the intended effect. What does this mean? Private business, the financial sector and the government must be represented adequately such that the resulting policies are agreeable and favourable to all.