Debt Recovery – Helping Businesses to Maintain Steady Cashflow
Trying to recover overdue debt is certainly one of the more difficult and unpleasant jobs involved in running a business. Not receiving payment for goods or services you provide can be highly stressful and can have a significant impact on the cashflow of your business. Businesses often adopt different debt collection procedures depending on a variety of factors, including their size, who the debtor is and what amount is owed.
Large multinational companies tend to adopt the most effective debt recovery practice as invoices and reminders are issued at fixed dates following the supply of goods and failure to pay within the requisite time frame will result in legal proceedings being issued. However, not all businesses have the manpower to enforce these kinds of procedures. As a basic guideline we generally advise our clients as a matter of practice to take the following steps when trying to recover debt:
Send out invoice for goods after 28 days
If no response, send a reminder letter 14 days later.
If no response, send a further letter 14 days later reminding debtor of payment requirements and advise that if payment is not received legal advice will be sought. This may seem drastic, particularly to localised businesses, however at this stage almost 60 days will have passed with no engagement from the debtor and this would be a worrying sign. We advise our clients that it is a matter of good practice to keep a tight control over your debt recovery procedures in order to maintain a steady cashflow and a successful business.
If you have exhausted these initial procedures and the debtor is failing to engage you may want to seek legal advice from our team of business and debt recovery solicitors. We would then send out a pre-action letter on your behalf to the debtor advising him to make payment of the debt within 7 days or proceedings will be issued against them.
In these circumstances, we understand time is of the essence and we will endeavour to recover the debt as quickly and efficiently as possible. A simple letter is sometimes enough for the debtor to make the payment. However, if the debtor fails to respond we can then issue proceedings and attempt to recover the debt through the courts.
If the amount owed is less than £3,000 it may be more effective to issue proceedings through the small claims court, this can be a more expedient and straight forward way to deal with debt recovery. Depending on the length of time the debt has been owed you may also be entitled to make a claim for interest on top of the debt and in some circumstances, you can make a claim for compensation for late payment of debt.
Our expert solicitors have vast experience in helping our clients recover debt. Whether you are the owner of a small business or a large-scale developer it is likely that at some stage you will encounter trouble with debt recover. At PA Duffy we offer solid advice on how best to manage your own debt collection procedures and can take legal action on your behalf to ensure that your business does not experience cashflow problems.