Credit Card Debt Guide

In this kind of situation the small organisation might well feel that they are in a difficult stance, especially if this is their first contract with the large organisation and they hope for more work from them. In this case the working relationship might well be at an early stage, where trust is an important component, even if the small organisation had done the required projects to a high and acceptable standard, this is only the first projects they have finished for the large organisation. It should be a mistake to pre-empt the situation and go straight into Debt collection, either by getting in touch with a solicitor who specialises in Debt collection, by going to a Debt collection agency direct or by opting for a do it yourself route by using Debt collection software. A far better initial move should be to make contact with someone in the finance department of the larger organisation and ask if there is any logical reason why settlement has been delayed. The next step should be to examine the contract that was drawn up for the projects and see if it contains a clause to address late settlements, if so then this can be applied as it will have been agreed when the contract was signed and should not cause bad feeling. If there is no late settlement clause then the “Late Payment of Commercial Debts (Interest) Act 2002” comes into use.

In this law the final date for settlement of invoices for projects done is 30 days after the invoice was presented. If settlement is not made then the small organisation has the legal right to apply a one-off set charge as some reward for the projects carried out in the Debt collection process; however this is a fixed charge based on the value of the debt rather than an actual figure for the cost of initial Debt collection work. The small organisation can also apply interest on a daily basis on the unpaid debt at a rate of 8% over the Bank of England base rate. For debts that became overdue between, January 1st and June 30th the base rate at the preceding December 31st is used and for debts after July 1st, the base rate at June 31st is used.

If the small organisation has made little progress by speaking with the accounts department then they might be recommended to escalate the problem and use one of the [methods identified earlier. Their decision as to which is best could be based on cost, since the solicitor and Debt collection agency can base their fees on the debt value rather than the cost of actually doing the work and this might be a significant amount to a small organisation. The Debt collection software option will probably be significantly cheaper as packages can be had for under

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