Private Sector Supremacy - Debt Recovery
In a recent article in The Times, the Small Business Commissioner is reported to have revealed that he has only managed to recover £2.1m in unpaid invoices on behalf of small companies in the year since he was appointed. He has also refused to disclose how many companies have been assisted.
I remember being in a room full of commercial litigators at a lecture given by a high ranking functionary in SOCA, the forerunner to the National Crime Agency who announced proudly that they had, in the period they had then be operating in, recovered proceeds of fraud amounting to £10m. This was met by stunned silence from the private sector which recovers those sorts of sums routinely without the aid of government or law enforcement.
For decent small business owners and indeed any business owner, not being paid for works done adds a completely unnecessary and sometimes dangerous dimension to businesses.
Large businesses make a point of effectively gaining another level of credit. For a large company with a lot of invoices they can actually sweeten their cash flow considerably simply by not paying people and because of their purchasing power small businesses are often reluctant to take them on because if they do they know they will not get any more business, they also know that legal fees can exceed the recovery.
Booroola (Jersey) Limited has a specific product for this, the debts are assigned to us subject to an agreement to return a percentage to the original creditor: this is where we step in as an intermediary between the creditor and the debtor. As the debt has been assigned to us we are impervious to any form of pressure from the paying party, we brook no nonsense. If the debt is due it is either paid within days or writs or winding up applications are issued.
From the suppliers point of view they cannot be pressured because they have run out of patience and they have “sold” the debt over to a third party so they too can no longer be pressured. This can work very effectively as a means of righting a small or medium sized business’ cash flow: sometimes within a very short period of time.