How to Keep Good Relationships While you Chase Business Debt


The financial landscape for many industries has been bleak over the last 18 months. Many businesses have struggled to survive with reduced revenue and mounting debts. It is estimated that around 10,000 licensed premises closed their doors in 2020, along with 17,500 chain retail outlets.

All areas of the UK industry were hit to some degree, and businesses have struggled to pay invoices on time, leading to a knock-on effect where their creditor cannot pay their bills either. This has led to businesses closing and unemployment rising.

In most instances, debtors are very willing to pay, it is just the current circumstances that are dictating problems. One problem with chasing business, or personal debt, is that it often damages relationships. Sometimes long-standing business relationships can end due to the way a debt was pursued.

There are many ways to recover debt, some friendlier than others. Here are some ways to get invoices paid, and still maintain good business relationships. 

Why are businesses struggling so much with debt today?

The first, and most obvious, cause for the current situation is the pandemic. Multiple lockdowns, social distancing, and the general fear of being in public has meant that businesses have had far fewer customers over the last year or so.

This has led to a huge rise in business debt collection in London and across the country, as revenue has dropped. Businesses often extend credit to their customers and expect them to pay within a certain time frame. This can be anything from 14 to 90 days, but normally payment is expected within 30 days of the invoice being issued.

For some businesses, the line of credit has been difficult to pay off due to the pandemic, and debt has accumulated. For example, a business might buy X amount of products from their supplier, sell these to the public for a profit, and use the returns to make another order. However, when they cannot sell their stock, they have no money to pay their suppliers, and debt mounts up. 

How does this affect the supply chain?

Simply put, if one or more businesses are unable to pay a supplier, then that business will start to have cash flow problems. Once that happens, they will start to find it difficult to pay their suppliers, and so on.

This chain effect can be devastating, and lead to not just one business being liquidated, but perhaps others too. Cash flow problems can lead to job cuts, and this has been evident across London in recent times. It was reported that around ten percent of Londoners could expect to be unemployed by the end of 2020.

London had the highest unemployment rate during the last quarter of 2020, and it is these figures that should alarm, and make it clear why businesses need to find ways to recover accounts receivable. However, they need to do this while keeping good communications, as no one can afford to lose customers at this point in time. 

Communication is key

Possibly the most important thing when trying to get invoices paid on time is to communicate. There are many options today for business communication; letters, invoices, SMS, telephone calls, emails, and messaging services such as Line and Whatsapp.

Letters can be sent by recorded delivery so that proof that they arrived is obtained, but other methods are faster and cheaper. Phone calls are a very personal way to communicate, and in some businesses, this may be an effective and friendly way to remind someone of an invoice that is due. SMS and email can also be effective. They are both instant, and delivery reports can show that an SMS has both arrived, and been read.

The benefit of using SMS and messaging services is that they are generally instant, have provable delivery methods, and are unlikely to be ignored. People look at their phones when a message arrives, most people do not ignore it.

However, communicating with a debtor can be time-consuming, and fruitless if they do not have the means to pay outright. There may be a better communication tool available. 

Use collection software and systems

Businesses use many automated tools to help with different areas of their industry. They often overlook one area that could help considerably when it comes to getting paid though. Cash collection software can help with communication, reduce the time spent chasing debts, and make life easier for customers.

If a business used a cash collection system then they could automate their invoicing, and much of the communication. These systems will send out automatic late invoice letters and other communications with the debtor to remind them of payments that are due.

Apart from the communication side of the system, they can also help a business recover payments, and help the debtor to pay in a way that suits them by offering more options. 

Allow multiple payment methods

Many businesses would pay sooner if the payment options were easier. Some companies procrastinate, and others cannot use the payment method required easily. If there were multiple options, and the possibility of paying online then life would be simpler and payments might be quicker.

A cash collection system would allow customers to pay through a payment portal or through a link on their electronic invoice. Being able to pay instantly means many businesses would do so, speeding up payments dramatically. Software from firms such as Payt allows debtors to set up payment plans through the system’s dashboard.

Letting a debtor set up and pay through a payment plan is one of the best ways to keep good relationships and recover debts. It allows the customer to pay as they can without the need to enter into harsher forms of debt recovery. 

How to raise finance while waiting on invoices

If a business had a particularly good history with a customer, then they might want to avoid having to make a court claim or involve lawyers and debt collectors. 

However, they will still need a certain amount of cash flow.

If a customer is struggling to pay but a business believes they will be able to very soon, then they could forgo a payment plan and raise cash another way. Invoice financing means that a percentage of the outstanding debts can be borrowed for a short period for a small amount of interest. Once the invoices are paid in full, the loan is cleared.

This allows a business to use accounts receivable as an asset, and for the debtor to avoid CCJs or damage to their credit score. A business can also stipulate that any interest that occurred by late payment has to be covered by the customer. 


Keeping good relations is very important right now, perhaps more than ever. Businesses need to retain customers, and long-standing relationships can be damaged irreparably by poor debt management.

Clearly, businesses need to recover debts so communication is vitally important to ensure that once an invoice is paid, business continues as normal. Personal communication can be very effective, but time-consuming. Automating processes through debt management and cash collection systems means that late reminders are posted automatically.

Allowing payment plans, and easier payment methods could mean that debtors pay faster and with less need for reminding, and no need for calling in debt collectors and lawyers.