The main risk when providing any kind of loan is that the recipient will default on their payment. In the context of recovering debts from businesses, this can become quite complicated, with multiple different paths open to those seeking repayment.

While we acknowledge that it can be stressful for creditors to find themselves in these kinds of situations, it’s important that you think before deciding on a specific path of action. To help you work out what to do, take a look at our 3 top tips on the topic.

1. Think long term

When trying to recover debt from a business, it’s crucial that you try to take a long-term perspective. If you have a substantial amount of money tied up in the business in question, and they are unlikely to be able to repay you even if they sell off all of their assets, you need to think seriously about how you’ll proceed.

While you might be able to get the company wound up and put through a process of forced liquidation, this may only result in marginal returns for a lot of work. Instead, it might often be better to try to work with an insolvency practitioner such as Chamberlain & Co to support the business, and try to bring it back to a position where it can reliably turn a profit. 

This might take longer for you to get your money back, but it could increase the chances that you recover all rather than just a fraction of the debt.

2. Explore all of your options

You might be surprised to find just how many legal options there are for creditors trying to recover debts from businesses. There is a whole range of different legal structures that have been designed to help mediate these processes, from Creditors’ Voluntary Liquidations to administrations.

It’s important to explore all of the options you have available to you, instead of just choosing the route that you’re most familiar with. Each path will provide you with certain benefits that will potentially be more or less helpful in your specific situation.

3. Focus on communication

While there are a range of legal avenues that allow you to seek debt repayment, it’s important to treat these as last-ditch solutions. Before escalating to this kind of level, try to communicate with the business, and see if you can arrange a repayment arrangement in a more amicable manner. 

This way, not only will the process hopefully be less stressful, but you’ll also save money on solicitors and insolvency practitioner fees. All parties involved will likely prefer to deal with things in this manner, and it’s important to keep this simple fact in mind.

Debt recovery can be a complex and difficult topic to navigate properly, and it’s important that you get help from the right parties. By focusing on these simple tips listed above, you can maximise the chances that you’ll get back what’s owed to you while using as little time and effort on the process as possible.