If your business is owed money, try to recover the debt yourself by chasing the payment. If this proves unsuccessful, contact our debt recovery solicitors to discuss your options. We can send a letter before action, demanding that payment be made in full by a certain deadline. Usually, this is enough to prompt an evasive debtor to settle the outstanding sum. If not, we can pursue legal proceedings on your behalf.
Recovering a Business Debt
Chasing a business debt can be a frustrating process. Often phone calls and emails are left unanswered, meaning it can take persistence to break through the radio silence. This wastes a lot of time and energy, both of which are often in short supply for business owners. Many people also dislike the confrontational aspect of chasing invoices. Some even choose to write the money off as a ‘bad debt’ rather than take further action.
Do Not Give Up
However, you should not give up on outstanding payments. There are steps you can take to recover the debt, many of which are simple and cost-effective. If you fail to do so, it could have a detrimental impact on your business. The debtor will also have made a gain from your loss. This is incredibly unfair, especially when you have provided a product or service, for which you deserve to be remunerated.
How to Recover a Business Debt
Politely chase payment
The first step is to politely chase the payment. You should include terms on your invoice, stating how long the debtor has to make payment. This is usually 30 days. Once 30 days have passed, try sending a polite email asking whether there is a problem. More often than not, an invoice has simply been overlooked or has gone missing. Alternatively, the accounts department may be missing certain information.
Discuss any disputed invoices
Your initial enquiries may result in the invoice being paid – or, it may expose underlying problems. For example, the debtor may actually dispute the invoice, perhaps because they think the total sum is too great. If so, you should open a dialogue in an attempt to resolve the issue between you. If this is not possible, we recommend speaking to our debt recovery solicitors about the options open to you.
Get expert legal advice
If the invoice is not disputed but payment is still not forthcoming, your next step is to speak to our debt recovery solicitors. You may be reluctant to involve lawyers, as you are probably fearful that your legal fees will outweigh the value of the debt. However, we offer a fixed price on undisputed invoice debts, allowing you to limit the costs involved.
Letter before action
We will send a letter to the debtor business. This is called a ‘letter before action’ or a ‘letter before claim’. It will set out exactly how much the debt is and provide a deadline by which payment must be made. This is usually seven or 14 days. The letter should also state that if the payment is not fulfilled by the deadline, formal debt recovery proceedings will be issued. Often, a letter from a solicitor is all it takes for the matter to be resolved.
If the debtor business still fails to pay the outstanding sum, the next step is to issue court proceedings in the county court. This was formally known as the small claims court. If the debtor does not acknowledge the debt within 14 days, you will be awarded a judgement. This will be equal to the debt plus interest. If the debtor disputes the debt, there will be a court hearing, after which a judge will decide how much (if anything) you should receive.
So long as the debt is genuine – and you provide sufficient evidence – the judge will find in your favour. However, just because you have won the case, does not necessarily mean that payment will be instantly made. The debtor may continue to be evasive, in which case enforcement proceedings will be necessary. There are a number of ways to ensure the debt is recovered, including:
- A third party debt order – which is served on the debtor’s bank account, meaning the bank pays you directly
- A Charging Order – which is served on the debtor’s commercial premises, meaning you get your money if/when the property is sold
- A High Court Writ of Control – which is when High Court Enforcement Officers recover the debt for you
- An application for Stop Orders and Stop Notices
- An application to freeze assets or money
- Instructing bailiffs
There is also an alternative to county court proceedings, and that is to issue a Statutory Demand instead. This is a written request that states the debt must be paid within 21 days. A failure to do so will result in winding up proceedings. This is usually only applicable if the value of the debt is £750 or more. Evidently this is a serious threat and often results in prompt payment being made. If not, you can begin insolvency proceedings against the company.
If the company cannot pay you within 21 days, you can submit a winding-up petition to the court. If successful, this would see that the company goes through compulsory liquidation. You would be a creditor of the company, and the money will be repaid once the company’s assets have been sold. However, there is a risk you will not recover all (or any) of your money if the company is insolvent.
Contact our Debt Recovery Solicitors
If your business is owned money, please do not suffer in silence. There are proactive steps you can take and you will not necessarily have to go to court. It is incredible how effective a solicitor’s letter can be at securing payment from a debtor. Companies that would not answer your phone calls or respond to your emails suddenly push your invoice to the top of the to-do list.
If legal proceedings are necessary, we can discuss the options available. The right course of action will depend on the value of the debt, and whether it is worth your while to pursue the matter further. At Altion Law we offer a fixed fee for small claims up to a limit of £10,000. This ensures you can make an informed decision as to whether or not to proceed. If you do instruct us, you can rest assured that we will fight to recover the debt you are owed.
For a confidential discussion with our solicitors, please contact us today at Altion Law.
Call us on 01908 414990 or complete our online enquiry form and we will get back to you.
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