How Can Accountancy Firms Recover Debt?
Debt is a serious threat for all UK businesses, with 53% of small to medium businesses being owed money from late payments. Accountancy firms are not exempt from this and in the last 10 years we have seen the volume of work received from our clients in the accountancy professions increase threefold. Admittedly during this period, we have expanded our client base but this does not hide the fact that the volume of individuals and companies failing to pay their accountants is increasing.
In addition to having robust credit control processes in place there are some key actions we would recommend clients utilise to protect themselves to some degree against the effects of bad debts. A Director’s Personal Guarantee could be signed and incorporated as part of the account opening form completed by limited companies. From a debt recovery perspective, these are a sensible move to combat against Directors of phoenix businesses simply walking away from their obligations to the accountant that has advised them or finalised their accounts. We suggest this should be a standard operating condition for doing work with any newly incorporated business or new connection.
Most of the uplift in volume we have experienced relates to debt incurred by sole traders. In these instances, there is also an option for accountancy firms to avoid unpaid debt. In recessionary times clients could look to protect themselves by requesting regular stage payments. The dental profession, for example, regularly seeks to limit losses by these means and people generally accept payment to account as the norm.
If a client’s own credit control process fails to generate settlement external recovery services should be considered. It’s important to know which debt collection agency (DCA) is the right option for you. It’s essential to research the agencies available and select a DCA that knows the area, knows what line of business the debtor is engaged in and knows which legal remedies are most appropriate enabling quick recovery.
At AMA, we have provided dedicated Sheriff Officer and debt recovery services to the professions for 3 generations. Using a blend of up to date technologies and traditional negotiating skills we experience high recovery rates. Our product offering is based on a no collect, no fee basis; which we have always found provides the edge to engineer a quick, successful conclusion.