5 Steps to improve a Collect Out

As an Insolvency Practitioner, you will have 2 main concerns:

Getting as much of your fee paid as possible without the need to write off Work In Progress.

You work extremely hard for your fees, so jobs where you have to write off WIP are disappointing, especially after how difficult it is to get jobs in the first place in the current market.

AND

Getting the best return for Creditors, secured or unsecured.

The better return the better your reputation when the next job is being considered.

Yet it can be increasingly difficult to collect all the money owed, and deal with everything else that’s involved in an insolvency.

At Credebt, we provide a range of services to the Insolvency, Invoice Finance, Turnaround and Corporate Markets, and we would like to share some of our tips with you to help you achieve a better Collect out.

Our clients include Deloitte, BDO, RSM, Alix Partners, Moore Stephens, Aldermore, Lloyds, RBS and many more, so we have a proven track record in this area and know what it takes to maximise recoveries from an Insolvent ledger.

We can help you improve your Collections by giving you training, or taking on the work for you.

Here are 5 steps you can take that we know can help you improve your Collect Out of Insolvent Ledgers by 20% if implemented correctly. Imagine what that could do for your business!

Step 1: Pre-appointment Ledger Audit and Assessment

You need to know as early as possible what the true positions is regarding the collectability of the most volatile asset.

Therefore, before you take on the case, you need to visit the business and

  • audit the Debtors
  • audit the Order-to-Cash process
  • assess the collectability of the Ledger

It is important to do this as early as possible in the process, as there can be significant differences between what the business owner says is owed, and what can really be recovered.

This will allow you to more correctly estimate the expected amount that can be recovered and will give you a clear idea of the current Debt Turn and Order-to-Cash process being used.

We do this as standard during our Debtor Collateral Review, which is always Free of Charge. 

 

Step 2: Prepare the Sales Ledger

Once your audit and assessment has been completed, you need to tidy up the Ledger: 

  • Agree all write-offs
  • Agree Contras and Credit Notes
  • Resolve all disputes

This ensures that the Ledger is as clean as possible prior to Insolvency.

Step 3: Collate Books and Records

You need to make sure that all necessary books and records are properly collated and stored securely:

  • Obtain physical documents
  • Download back-ups
  • Scan and store securely in the cloud

You may need to visit the property multiple times, as well as contact customers for updated records if the record keeping of the business is poor.

Step 4: Pre-appointment Credit Control

If you can start the Collection of the Debtor Book prior to a formal Insolvency, you will maximise recoveries. This can be extremely useful with contractual Debts where it is understood that certain Debtors will be reluctant to pay once they hear about the Insolvency.

 You’ll need to follow a rigorous Credit Control Process that includes at least:

  • Send letters/emails
  • Make calls
  • Send more letters/emails
  • Make more calls

Step 5: Collect-Out of the re-assigned Ledger

Sometimes a Funder has communicated that they have recovered their funds in full and are re-assigning the Ledger to you, the Insolvency Practitioner.

These Ledgers are often difficult to collect as several months will have elapsed since the Insolvency and the paperwork may not all still be available. If you’ve followed steps 1-4 this will be under control, but that’s not always the case.

Investigate if any residual funds are going to be collectable and then maximise collections immediately.

  • Contact the Funder to obtain whatever records are available.
  • Contact all remaining Debtors promptly to chase payments, but be prepared that a lot of them may have paid and the Funder has not updated their records.
  • Agree settlements promptly with Debtors as the Debt may already be 6-12 months old.

How can we help?

Remember that we are the experts in this field and we are more than happy to help you with any issues you may have.

Feel free to contact us for a no obligation chat in total confidence, or arrange your Free Debtor Collateral Review to find out your Position. 

Call us on 0845-6385256 or email info@credebt.co.uk

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