Why do debtors ignore warnings?

Human nature makes many companies hide from difficulties - or is there something dishonest about liquidations?

Why didn’t the directors of Carillion, Thomas Cook, Jamie Oliver’s Italian and Debenhams see the crash coming?

It’s a question ICSM Credit are often asked about firms that fail leaving millions of pounds in unpaid bills in their wake. The answer is the directors are usually fully aware of the problems but simply hope either a miracle will happen or fight on in the belief they can trade out of the difficulty or are simply in denial.

Human nature tends to lead most people to bury their head in the sands to use the old ostrich analogy. As problems mount up the inclination is to ignore them by not opening letters for final demands, not answering urgent emails or avoiding phone calls from creditors.

The same happens with creditors who hope their debtors who haven’t paid an invoice past 30, 60 or even 90 days will pay up. ICSM Credit regularly comes across members and associates who have outstanding invoices they have written off despite the debtor still running a business. It can be a case of feeling embarrassed at constantly chasing a business for payment. Perhaps they are family friends or the owner has been unwell and it feels insensitive to press for payment.

Certainly, ICSM Credit has heard all the reasons why firms allow unpaid invoices to eventually be written off and again it appears to be in part due to human nature. When asked if a firm has any outstanding invoices which they could do with help in settling there’s often a shrug of the shoulders and an unconvincing denial from the owners. Who wants to admit someone has taken them for a ride?

Of course, there are the phoenix companies of this world who close down one day and open up the next claiming to be a new firm and failing to pay their creditors. It’s a grey area and many will say the practice is at best dishonest and at worst borders on the criminal.

Grasping the nettle takes courage but once ICSM Credit’s free micro debt service for its members is requested around 87% of invoices are settled. The main reason being that when a debtor is contacted by a third party with a final demand and the threat of escalating costs they come to their senses and either pay up or speak to their creditor to arrange terms of payment.

ICSM Credit’s Free Micro Debt Recovery Service

Let ICSM Credit do the chasing of those debts you would normally write off and if we can recover the debt, we will send it over to you minus a fee. Micro debt recovery covers invoices less than six years old of up to £750. If paid ICSM Credit’s fee is 40% of the amount with you receiving 60% of the original invoice. If nothing is received, there’s no charge. It’s not a debt collection service but a tried and tested system of emails, letters and reminders – and it usually works.

Contact Ian Carrotte on 08448 54850 or email him on ian.carrotte@icsmcredit.com to find out more.

Tel 0844 854 1850 ___ Fax 01454 327 355
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