Introduction

► Introduction

Many relationships have foundered on receipt of an arrears letter. However, it is not wrong to let your customers know when payment is overdue. What you have to evaluate is how you are going to inform that 'very good customer' that they have arrears and still maintain that 'great relationship’. This article will outline a number of options, for most situations. TGS & Partners specializes in retail and loan recovery solution TGS covers all aspects of services :-

1.	Debt Collection Method.
2.	Collection Methods.

► Collection Methods

1.	Invoice Statement.
2.	Telephone.
3.	Letter - Automated or Selection.
4.	Letter Telephone.
5.	Personal visit to customer.
6.	In-House Litigation.
7.	Outside Agency - Debt Recovery Agent or Solicitor.

The collection methods you use must be cost effective with an efficient system to identify, action, monitor and follow-up debtors. However, some thought must be given to the industry in which you operate and/or the client base you sell to.

► Information Gathering

All the information will be gathered and analyze once received from clients. All the Credit reports and the financial reports are to be kept as Private Confidential mode so that no one can access it. This is to maintain the security from being breached through.

► TGS Services

1.	Telecommunications Companies - Credit Card Organization.
2.	Financial Institutions/Bank.
3.	Leasing Finance - Hire Purchase Company.
4.	Contractors - Suppliers - Insurances.
5.	Property Consultants - Accountancy Firms.
6.	Stock Broking Firms - Hotel Caterers.
7.	Advertising Firms - Hardware Electrical Dealer.
8.	Freight Forwarders - Pharmaceutical Firms.
9.	Printing Well - known Publishers.
10.	Multi - National Corperations.

► Credit Management

Debt Recovery Services - how does it work?

The payment date has come and gone. You've sent letters and made phone calls but still no cheque has arrived. It's time to bring in the solicitors. Many companies are worried about using legal or debt collection firms to chase up their unpaid invoices. They are worried that it will end a commercial relationship. You need to be realistic about this. If you aren't actually being paid it's got more to do with exploitation than commercial benefit. In addition, if they haven't paid you the chances are they owe other people money too While you let the debt drift further, more active creditors will be getting priority treatment. And if the company is in terminal trouble, the chances of the pot being emptied before you get your share are high. It’s partly a question of cutting your losses. Customers who take umbrage when you pursue legal methods of collecting debts aren't worth the time and effort you'll constantly have to spend chasing the cash they owe you. Also, if you've given the customer adequate warning via the letter cycle that the matter will be referred to a solicitor or debt collection firm if it is not settled by a specific date, then the customer cannot claim to be surprised if you do so.

Debt Recovery Cycle

► Debt Recovery Cycle

1) Letter before action

The first step your solicitor or debt recovery firm will take is to write to the debtor and tell him that unless the debt is paid within a stated number of days, court proceedings will be initiated. According to legal firm LRC this simple letter is usually effective in recovering about half of all the referred debts. This is because unethical businesses know that firms have internal procedures to work through before bringing in external legal support. They will use you as a cheap line of credit until that happens.

2) Court proceedings

If payment is still not forthcoming, the next step is to start court proceedings by issuing a claim form at court. You are liable for the costs of this but should be able to recover them from the debtor, if he pays in full, provided you have given him sufficient notice of your intention to take it to court. The letter before action will cover this. Court proceedings are officially started when the court issues the claim form and sends it by post to the debtor. From that point on the creditor is referred to as the claimant and the debtor as the defendant. The court will also send the defendant a form for acknowledging that he has received the claim and forms for admitting or denying the claim. This is called the response pack. The claim form must contain a statement of truth signed by either the claimant or his solicitor stating that all the facts the claim contains are true.

3) Judgment

If the defendant fails to respond to the claim, then the claimant can obtain a judgment against the debtor. This will take the form of a court order which requires the defendant to make a payment. The claimant can also apply for a summary judgment if the defendant has defended the claim but the defendant has no real prospect of successfully defending it. For example, if the defendant argued that the invoice had been paid but the claimant could prove that the cheque had been stopped, a summary judgment would be issued. To apply for a summary judgment, the claimant's solicitor completes an application form and provides written evidence to support it. A fee must be paid when it is filed with the Court. The defendant will have an opportunity to file his own evidence and a Court hearing will then take place before an official who will decide whether or not to award the judgment. This process usually takes between 8 and 12 weeks. The usual procedure for dealing with defended matters which could take 6-12 months to conclude and can cost a lot more. When the claimant is awarded judgment against the defendant, the court will normally order that the defendant pays the debt, interests and costs including any court fees the claimant has paid.

4) County Court Judgment

If a judgment has been obtained in a County Court and the debtor does not meet the requirements of the judgment within 30 days (i.e. pay up), the details of the judgment remain on the Register of County Court Judgments. If a potential supplier requests a credit reference on that debtor in the future, the CCJ will show up. The supplier may therefore decide that the supplier is a bad credit risk and choose not to do business with him.

5) Enforcement

Awards that are made by the courts are not enforced automatically. But there are number of processes which are designed to secure payment. If you are lacking information on the debtor, you can obtain a Court Order which requires the debtor to attend court and answer questions about his liabilities, assets income and expenditure. This is called an oral examination and enables the creditor to decide which of the various methods of enforcement he will use. If you discover that your debtor has assets then you can use a bailiff or sheriff to seize goods and sell them at auction to pay the debt. A business' assets are goods used in that business. If your debtor is person then he or she may have personal property such as a car. If the debtor owns land or buildings then the court can impose a charge on the debtor's property to secure payment of the due amount. If the debtor is an individual in permanent employment, the court can order his employer to make periodic deductions from the debtor's earnings and pay them into court so they are available to creditors. If the debtor is owed money then a court order can be obtained which requires that the person or company that owes money to the debtor to pay the money directly to you. This will not only include trade debtors but also companies such as banks and building societies who are holding money for him. Obtaining customers' bank details when they first apply for credit, really pays off in this situation.

6) Reporting System

TGS & Partners maintain our client records by using the application named “collection system”. Its application software that used to kept all the clients information and also can generate monthly or daily reports as well, so that our staffs can easily retrieve the client’s information and print out the required information if needed. We used crystal report application to design our report format.

7) Skills

All of our staffs are trained in such a way to handle our clients in a more proper and standards requirement such as professionalism. Collectors are to maintain highly possibly communications between creditor and debtors wherever required. The motive is to achieve the highest of possible returns with every cent that spent out.