A British entrepreneur who recently launched an automated digital platform to collect business debts believes he has settled the country’s oldest invoice – and in less than an hour. The news comes at a time that freelancers, small business owners and even umbrella company workers face late payments, which in effect could impact their credit rating if they can’t pay their bills on time.
Gary Brown, founder of Debt Register, used his system to successfully collect a £2,502 debt that was more than four years (1499 days) overdue – and it did it within 45 minutes of the new software-as-a-service platform going live and the debt being uploaded.
Gary invented the system having spent his life working in credit management and becoming fed up with customers who sat on their invoices without paying them: “It’s an industry-wide problem and I was determined to do something about it,” he explains.
“There are hundreds of businesses out there who generate large volumes of often low-value debt, where their only solution to late payment is to write it off or go through the courts. But with the court system having all-but ground to a halt, and with no guarantee of success anyway, I felt there just had to be a better way. And so Debt Register was born.”
Gary Brown, Founder of Debt Register
Gary says the system is also effective at collecting larger debts, and from overseas: the largest debt collected to date was $1,119,412.80 from a debtor based in France.
Brown claims that over 80% of debtors are paid within 7 days and is 10 times faster than taking legal action.
How does Debt Register work?
The software platform automatically identifies and verifies email contacts within a customer who is responsible for paying the bills. Incorrect emails are still the biggest cause of requests for collections going unanswered.
The system asks for that bill to be settled, with the consequence that failing to do so will result in the company being reported to the leading credit reference agencies (CRAs). This damages their credit score, as well as their reputation, in an age when payment performance has to be reported to shareholders.
“Debt Register delivers a tangible and direct consequence for those companies should they continue not to pay an undisputed, overdue invoice,” says Brown, “and it is this ‘consequence’ that seems to concentrate the mind!”
The system issues smart emails, which know when a debtor reads an email. This process captures the device that they read the email on and the associated IP address. This confirmation meets the requirement of Debt Register credit reporting partners, enabling the service to report their debt. To avoid this reporting, the debtor needs to clear their arrears.
The technology has recently been shortlisted in the Innovation and Technology category of the UK’s leading awards programmes for the credit industry.
How much does it cost?
The cost of the service isn’t exactly cheap, but if you have a client that owes you more than £500, the service could be more than worth it. Plus, you can offset some of the cost of the Debt Register service towards your debt recovery fees to the non-paying client.
For example, the platform enables you to charge slow-paying debtors interest, compensation, and reasonable recovery charges by enforcing the EU adopted Directive 2011/7/EU on combating late payment in commercial transactions.
This is referred to in the United Kingdom as ‘The Late Payment of Commercial Debts Act’, more details of which can be found here. Recovering these additional charges enables you to offset against the charge for the service.