Do you engage actively with your debtors to understand the most efficient way to get your money from them? Do you what is necessary to ensure that you are paid first?
Many businesses are experiencing cash flow difficulties and therefore are paying those creditors in the order of who shouts the loudest. By taking positive action to recover debt, business will apply pressure to these won’t pay debtors, which should motivate them to move you to the top of their list and make payment early.
At a recent event Maria Koureas-Jones, from Breeze & Wyles Solicitors LLP, delivered a presentation on the steps that businesses can take to improve their internal credit control processes to reduce their aged debts.
Regarding the won’t pays, the internal credit control process should be applied diligently and timeously to encourage payment. If the debt remains unpaid after the credit process has been exhausted, it is recommended that the debt is referred to a solicitor.
A letter from the solicitor to the debtor informing them that legal action will be taken to recover the debt (before the solicitor issues a Court claim) is often effective; it is additional pressure on the debtor to settle the outstanding amount.
The negative issue for a business considering this addition to the credit control process is the cost associated with instructing a solicitor to recover the debt.
This is particularly true where a solicitor is charging an hourly rate for this service. These costs often deter a business from recovering its debts in this way because its is generally correct to assume that recovering debts in this manner will make the process non-cost effective. The outcome is often that a business will write-off the debt despite the fact that the debtor might have the means to pay.
FIXED COST DEBT RECOVERY SERVICE
It is for this reason that Breeze & Wyles Solicitors LLP has launched a fixed-cost debt recovery service for commercial debt recovery. A Letter before Action costs as little as £2.00 plus VAT, making it affordable for businesses to chase unpaid debt, irrespective of amount.
In the event that a debtor still does not make payment after receiving this letter, the scheme also gives businesses the opportunity to issue County Court proceedings and to enforce a County Court judgment at a fixed price.
A business’s claim will be enhanced through the inclusion of interest, costs and compensation to which the business will be entitled. Depending on the age of the debt and the terms agreed this additional sum can be quite significant.
The Service aims to ensure cost transparency to enable clients to remain in control at every stage. Breeze & Wyles Solicitors LLP expect this service to offer business value for money.
One final thought: assume that the debtor is suffering cash flow problems sufficient to lead to short term insolvency. How do you know when this will happen? Isn’t the important question ‘Will it happen before or after I get paid?’ One of the debtors other creditors will eventually consider taking action to recover its debt and then you will only be entitled to a few pennies in the pound. Make sure you are one of those creditors who gets paid in full.
For a copy of the debt recovery tips, e mail firstname.lastname@example.org
© Maria Koureas-Jones
Breeze & Wyles LLP 2011