We’re on our way out of recession, and there’s more money flowing through the economy – making it a good time to recover old debts that you may have all but written off in your own mind.
As long as you haven’t formally written them off, there’s nothing to stop you trying to recover old debts that have been outstanding for up to six years, the cut-off point put in place by the statute of limitations.
Even if you have recorded them as unrecovered debts on a past tax return, you can usually still pursue the debtor for payment, and simply pay any tax you owe on the money in the current financial year instead.
Here’s our five-step guide to recovering old debts – which should hopefully mean the credit crunch has a happy ending for at least some of you.
1. Check your deadlines
You can’t chase debts that are more than six years old, so the very start of the credit crunch back in 2007-08 is already out of bounds.
Identify any outstanding debts that are close to expiring, and make it an absolute priority to find the debtor before it’s too late – remember, just because you haven’t tried before, it doesn’t mean you can’t chase for payment now.
2. Find the debtor
Old debts can be more difficult to collect if the debtor has moved house or relocated their business (or ‘done a runner’, to put it bluntly).
Don’t be afraid to ask for help finding any of these vanishing varmints – our tracing service can track people down so you can politely remind them that they still owe you money.
3. Add interest
Nearly six years’ worth of statutory interest could come as a shock to your debtor, but it’s well within your rights to ask them to pay it, as that money could have been earning for you in the meantime.
Whether you use this as motivation for them to pay the original amount, or you insist on the interest being paid in full as well, it’s good leverage and can boost the final amount you receive quite substantially.
4. Control your credit
Let’s be honest, getting paid on time is preferable to chasing five-year-old debts, so learn your lesson and establish better credit control procedures for the future.
We can help with this – outsourced credit control takes the admin burden off of you (and shifts it on to us!) with a seamless, white-label service including your own dedicated phone number for enquiries, which we will answer using your brand name.
5. Go on holiday
All that’s left to do is spend your hard-won money, and if you’ve been unable to take a holiday due to the economic conditions of recent years, you might find this is the perfect excuse to head for the beach.
Of course, you might prefer to put the money back into your business, whether to build up a rainy-day fund for any future economic shocks, to invest in growth, or simply to service any outstanding debts of your own.
If you would like more information on old debts read our, ‘Is it harder to recover old debts?‘ blog or give the team a call on 0808 149 3279.