Dealing with Debtors Who are Playing the System

Now that the normal collection techniques that served everyone so well in the past have become so expensive, it has become very difficult to deal with recalcitrant commercial debtors who are playing the system - banking, in fact, on the fact that the expense of using the Courts in the UK is a non-starter for any creditor who is looking for anything less than £10,000, and that chasing debts abroad (even within the EU) can be extremely time-consuming and difficult.

There is a potential - and relatively inexpensive - solution to this problem. Actually, there are two potential and relatively inexpensive solutions to this problem, and both rely on the fact that businesses need access to credit to survive.

Credit Reporting Agencies -like Equifax or Experian, for example - have enormous clout these days, and although using their services isn't free, it can still be cheaper and more efficient than using the Court system because, effectively, Credit Reporting Agencies can cause the 'credit well' to run dry for non-paying customers who are 'playing the system' in the hope that creditors will simply give up, write off the debt, and go away.

I was particularly interested, for example, in the Delinquency Notification Service that Experian operates under the name of Business Credit Information Inc . The service acts like a simple letter collection service - but it makes the long price of non-payment very, very clear indeed.

And then, of course, there are Credit Circles - both formal and informal. The Office of Fair Trading has laid down certain Rules govern the activities of members of formal Credit Circles in the UK, but there is nothing in those rules that forbids members naming defaulting customers or giving chapter and verse as to the nature of the default - and no Rules govern the purely informal conversations that go on as a matter of course between credit personnel who happen to be working in the same trade. Credit Circles, too, can make the 'credit well' dry up.

Different times demand different techniques. I think that these can be very powerful and persuasive ones.