To Claim or Not - A Commercial Decision

When I was talking about negotiation a few days ago, I pointed out that adding a clause claiming interest and statutory collection charges under the 2002 Regulations to your standard in-house collection letters would allow you to negotiate from a position of strength - to make concessions when necessary without losing very much (or any) of the outstanding principal balance.

The same tactic works well with persistent delinquents, too. Customers who consistently fail to pay to terms need a sharp reminder of your right to prompt settlement or interest and/or compensation in lieu of prompt settlement. You are not, after all, in the business of providing interest-free loans to any customer, however good or long-standing that customer may be, and even a 'one-off' decision to demand your rights can be a salutory wake-up call that could keep the customer on the straight and narrow for a while.

However, whilst reserving your right to claim interest and collection charges is always a good idea, insisting on getting them has to be a purely commercial decision based on a variety of factors.

You don't have to claim interest and/or compensation, either under the legislation or under your own Terms & Conditions if you don't want to, or feel that it might be commercially unwise. The Guidance Notes accompanying the 2002 Regulations state quite catagorically that antagonising customers and jeopardising customer relationships by use of the legislation should be avoided - and you should take that on board.

Whether or not to press for interest and compensation must be a purely commercial decision based on commercial realities. What I've been talking about here for the past few days is a fine, well-intentioned piece of legislation that - like the Supermarket Code of Conduct - was intended to redress the balance of power between large and small businesses and ensure fair trading practices. In reality it cannot do so, and therefore the legislation needs to be used 'selectively'. Enough said?