Can you claim interest on your outstanding invoice?

One of the questions that we are frequently asked is “can I claim interest from my debtor, on my outstanding invoice?” The answer is generally ‘yes’ however, you do need to consider the rate of interest that you are entitled to apply. Applying the wrong rate of interest can open the way to a valid defence from your debtor – this will simply delay recovery. It is therefore important to claim interest at the correct rate.
You have the right to ask for interest on unpaid invoices in 3 circumstances.
1. Your terms and conditions may have a clause that claims interest for late payment of invoices. It is surprising how often Companies do not know that they have this clause in their terms and conditions. Contractual interest will be applied by the Court where there is one included in your terms and conditions.
What rate of interest should your terms and conditions claim? It should be enough to deter late payment and should be a fair alternative to statutory interest (see paragraph 2 below). If you are unsure whether the contractual rate applied by your terms and conditions is appropriate, please contact our Rita Wright.
If your terms and conditions are silent on interest, we would recommend that they are re-drafted to include interest as a contractual term. Check your terms and conditions and if you think these need updating, or you would like us to simply look over them to advise you whether they are adequate, please contact our Brendan O’Brien: brendan.obrien@breezeandwyles.co.uk.
2. If your contract is silent on interest, you are entitled to claim interest at the rate of 8% above Bank of England base rate on all invoices from the date the invoice was due. This entitlement stems from the Late Payment of Commercial Debts (Interest) Act 1998 and applies to all business to business debts. You are also entitled to claim compensation from your debtor, on each outstanding. This can substantially increase the amount owed. For letters before action we will calculate the interest and compensation for you and add this to the amount owed. We have found that this is often enough to prompt payment.
3. Finally, if your debt is business to consumer and your terms are silent on interest, you are entitled to claim interest under s69 of the County Court Act 1984 at the rate of 8% from the day you issue Court proceedings.
For Judgment debts over £5,000 you can continue to claim the interest until the debt is paid. Remember you can only claim one type of interest at a time.
A Letter before action to a Debtor claiming payment of the outstanding invoice and interest is often enough to prompt payment.
If you have an outstanding debt, it is worth trying our Low Cost Fixed Fee Debt Recovery Service where we will calculate the interest, add the compensation if you are claiming under the Late Payments Act, and send a letter to your debtor for £4 plus VAT.
If you would like to know more about our Debt Recovery Service please contact our: Rita.Wright@breezeandwyles.co.uk / 01992 558411.

Enforcing a Judgment

In tip sheet 7, we explained the benefits of pre-issue checks on debtors before commencing proceedings in the County Court. This avoids spending money to obtain Judgment and then finding that your debtor is a “man of straw” and has no assets against which you can enforce your Judgment.
This fact sheet explains some of the popular methods used to enforce a Judgment and some of the advantages / disadvantages of each, so that you can decide which method of enforcement is the best method to obtain your money.
Execution against goods
Execution against goods is a popular method for enforcing a judgment. If a Judgment is over £600, we recommend that the Judgment be transferred to the High Court and executed by High Court Enforcement Officers. An Enforcement Officer will make a visit to the debtor’s premises with a view to seizing goods to the value of the judgment. The officer will try to persuade the debtor to make payment. There is always a risk that a) the debtor does not have any goods to seize; b) that the debtor has left the premises or c) the debtor refuses to let the enforcement officer in (if it is a residential property, a debtor can refuse entry).
There is an abortive fee if the Enforcement Officers are unsuccessful and therefore, it is worthwhile satisfying yourself that a debtor is likely to have goods of value that can be seized (e.g. vehicles / equipment / machinery) before instructing enforcement officers. If the enforcement officers are successful in seizing goods to the value of the Judgment, they will try to recover their costs from the debtor.
Charging Orders
A charging order is a way of securing a Judgment against a debtor’s beneficial interest in land (e.g. house / commercial property), securities or certain other assets. Where there is sufficient equity in a debtor’s property, the benefit of the charging order is that the debtor will need to settle the debt before selling the land. You should satisfy yourself that there is sufficient equity in the property to pay you after the secured creditors (e.g bank) have been paid first. This is not always easy to do but we can discuss this with you should you be in any doubt regarding the debtor’s position.
Attachment of Earnings
An attachment of earnings order attaches itself to a debtor’s income from employment and allows a proportion of the debtor’s earnings (deducted by his employer) to be paid to a judgment creditor in instalments until the judgment debt is satisfied. Attachment of Earnings Orders are a popular method of enforcement as they are an inexpensive and relatively straightforward method of collecting the debt.
Debtor’s are often concerned about the possibility of their employer knowing about debts owed by the debtor and therefore, this can often be a powerful method of enforcement where a debtor is employed.
Insolvency Proceedings: Bankruptcy and Company Liquidation
If you are owed more than £750 by an individual debtor you can apply to make him / her bankrupt. If your debtor is a company, you can apply to wind up the Company.
After an order is made the assets are collected by a trustee or liquidator and distributed amongst all the creditors. There is no guarantee that this process will result in payment of your debtor however, the threat of insolvency is often encourage a debtor to make payment. As an alternative to applying for the bankruptcy or liquidation, it is worth considering serving a Statutory Demand for Winding Up or Bankruptcy. This is a formal request for payment within 21 days. In the event that payment is not made within 21 days, the debtor is deemed unable to pay their debts and you can thereafter apply to the Court for bankruptcy or winding up. Service of a Statutory Demand can be a very effective way of prompting payment and is a lower cost alternative to a formal petition.
If the debtor is unable to pay the debt, you can petition for bankruptcy or liquidation. You will need to satisfy yourself however that this is likely to result in payment of the debt or that you are happy to proceed with this process even though payment of your debt may not follow.
We are always happy to discuss the best method of enforcement for your particular matter and would encourage you to consider enforcement methods, before issuing proceedings, in order to ensure that you only spend money on Court proceedings where it looks as though enforcement is likely to result in payment to you.
If you would like further information regarding our debt recovery service, please contact our Rita Wright at rita.wright@breezeandwyles.co.uk or 01992 558411.

Are you limiting your exposure to bad debt???

Cash flow remains a key concern for Companies with a number of Companies juggling their creditor’s demands for payment. Our experience is that the average number of days for payment of an invoice continues to increase which in turn is impacting on the health of creditors. If your aged debtor list is increasing or there is an extension in the average number of days for payment of your invoices, there are steps you can take to limit your exposure;
CAN YOUR ACCOUNT OPENING PROCESS BE IMPROVED?
 Ensuring that you have the correct information for a new client is vital to the efficiency of your internal credit control process. The most common errors that we find clients make is not correctly identifying the legal status of their client. e.g the account is opened in a debtors trading name and is it not known whether the client is a Limited Company or Partnership.
 Running a “financial health check” on your new customer is a key way to limit your exposure to bad debt. Without running a financial health check, it is impossible to assess the risks associated with offering credit terms to your customer. If you know that your new customer is high risk, you can take a view on whether you should either a) demand payment on Order or b) lower the credit limit applied to the account.
 We charge £10.00 plus VAT for a report on a Company or partnership’s financial health. This search is extremely cost effective when considering your increase in exposure to bad debt when trading blind with a new customer.
The report, which will be sent to you, will look at;
 The debtor’s “health rating”; whether the debtor is considered to be “high risk” in terms of their financial position or whether the debtor has a good trading history;
 The debtor’s trading address
 The debtor’s legal status
 Whether there are any CCJ’s against the debtor and whether these have been paid;
 The debtor’s last filed accounts including balance sheet (and any assets identified on the same)/ profit and loss accounts / cashflow and turnover (where such information has been filed with Companies House);
 Whether any petitions have been filed for the winding up of the debtor;
 The details of the debtor ‘s directors and shareholders (if a Limited Company)
CAN YOUR CREDIT CONTROL PROCESS BE IMPROVED?
 Being proactive in chasing your debtor is key for reducing the aged debtors list. This entails chasing your debtor as soon as the payment period expires and ensuring that a second and third chaser letter are sent at weekly, or fortnightly, intervals thereafter. Including at least one telephone call in to your internal credit control function will also assist to apply pressure to your debtor.
 Ensuring that your credit control team / management and sales team communicate is vital in limiting your exposure. If your credit control team is aware that a client is becoming slower in making payment, or failing to make payment altogether, a decision should be made immediately regarding whether to offer any further credit to the customer.
 Your exposure to a debtors insolvency increases significantly with the passage of time and therefore, instruct a Solicitor promptly upon the expiry of your credit control process.
Breeze and Wyles offer a low cost debt recovery service with our fees for chasing your debtor starting at £2.00 plus VAT for a Letter Before Action and depending on the amount of the debt, between £65.00 plus VAT and £170.00 plus VAT for issuing proceedings. Our fees are fixed allowing you the comfort of knowing the true cost of pursuing your debtor through the Courts.
If you would like further information regarding our debt recovery service, please contact our Rita Wright at rita.wright@breezeandwyles.co.uk or 01992 558411.
If you would like further information regarding our “health check” service, please contact our Maria Koureas-Jones at maria.koureas-jones@breezeandwyles.co.uk or 01992 558411. We charge £10.00 plus VAT for one off reports on a customer but can offer the service at a monthly cost where you wish to “health check” a number of customers each month.

Landlords and Letting Agents… Have You Secured Your Deposit on pre April 2007 Tenancy Agreements?

I have had a number of Landlords recently expressed surprised when I have advised that it doesn’t matter that the deposit was taken pre April 2007. The deposit should still have been secured and the prescribed information given since the Superstrike case in 2013.
This case, which was heard in the Court of Appeal involved Mr Marino Rodrigues who took an assured shorthold tenancy on 8th January 2007 on a fixed term of one year. Mr Rodrigues paid a deposit to Superstrike Limited who did not secure the deposit as the deposit protection schemes were not introduced until 6 April 2007.
On 22 June 2001 Superstrike served Mr Rodrigues with s21 notice and Mr Rodrigues defended the action on the grounds Superstrike had failed to secure the deposit. He argued that when the tenancy became a statutory periodic tenancy in January 2008 it effectively became a new tenancy and therefore the deposit should have been secured at the point.
The Court of Appeal agreed and held that a Statutory Periodic Tenancy is not a continuation of a fixed term tenancy and should be considered a brand new tenancy.
The legal implications are that deposits paid by tenants need to be protected within 30 days of the new statutory periodic tenancy.
Implications
If you do not protect the deposit within 30 days of a statutory periodic arising then:
• Any S21 notice will not be valid
• Penalties may be awarded to the tenant
If you do not serve the Prescribed Information (PI) within 30 days of a statutory periodic arising then:
• Any S21 notice may not be valid
• Penalties may be awarded to the tenant
If you don’t have grounds under s8 Housing Act then you are going to have difficulties getting the tenants out.
How to Remedy a Breach?
If you have not secured the deposit within 30 days of a new fixed tenancy OR when the fixed tenancy becomes a statutory periodic tenancy then the only remedy is to give back the deposit. You may still be subject to penalties if the tenant brings a claim for not securing the deposit.
If you have failed to serve the PI within 30 days of a new fixed tenancy OR when the fixed tenancy becomes a statutory periodic tenancy you can immediately serve the PI but you may still be subject to penalties if the tenant brings a claim for not securing the deposit.
If you fail to comply either then the s21 notice served is not valid.
Best practice
• Check all statutory periodic tenancies are protected
• Given changes made by The Localism Act and the outcome of this case re-serve prescribed information (ensure most recent version of the relevant scheme documentation). It is also advisable to check the tenant’s contact details for inclusion on the document so that it can be certified to have been received by the correct person
• Ensure you register deposits within 30 days of the tenancy becoming statutory periodic and re-serve PI and leaflet each time the tenancy is renewed as a statutory periodic tenancy.
This may seem onerous to Landlords and Letting Agents but it will avoid cases being thrown out or having proceedings issued for compensation for not securing the deposit.
For further information or advice please contact Rita.Wright@breezeandwyles.co.uk or telephone on 01992 558411

Breeze and Wyles shortly to revolutionise Wills and Trust instructions

Breeze and Wyles are continually developing technology to help our clients. Firstly we developed our innovative Breezeplus brand, revolutionising conveyancing and remortgage transactions. Then came our innovative Trust Wizard, available now, that writes your life policies in to trust instantaneously; using our compliant web based tool. Our latest development is set to transform Will and Trust instructions, making the process fast, interactive and slick.
Our app is fully compliant and will record interviews to ensure there is no miss selling to your clients.
So why should you care? Well, there is a huge referral opportunity in estate planning. Over half the adult population does not have a will.
There are many cases including some high profile such as Princess Diana or Michael Jackson. In Lady Diana’s case as the Will was not drafted the trustees did not distribute wealth according to letters of wishes. Michael Jackson’s $242 million estate was subject to intestacy laws in the US after dying without a will.
Approximately 25% of estates each year are intestate. Of those with wills, one in four are unfit for purpose.
Our application can help generate these required documents at a fraction of the cost of going to a firm of solicitors; who will provide your clients with what they ask for not what they need. Our estate planners using these tools are trained professionals with a massive amount of expertise and knowledge to advise your clients to take the right product. Plus there are great referral fees accompanying the products.
The interactive app integrates an estate planning fact find with state-of-the-art verification of ID software and payment tool. The instruction form can be white-labelled. Data is sent through via xml or as a pdf to populate our partner firm’s and update case management systems with the estate planning content. This will generate the legal document, which is then sent to a solicitor to be sense checked.
The initial popularity of the app revolves mainly around the ease for taking and certifying ID, however this is one of many innovative features. The application is currently available on Apple iPad.
Certification of ID technology utilises the camera on the tablet and our technology allows the user to stamp and then sign using a signature pen. Once the image is taken and signature attached on to the stamp, it is flattened and sent across to wherever you would like it sent. Laws firms accept certified ID as collected by a market professional.
No information needs to be input more than once and the app generates a family tree based on the information provided by the client. At the end of the instruction, it generates an invoice and will send across payment details to designated finance department.
This tool can be used more widely or we can train your staff to take estate planning instructions.
If interested please contact the legal services team on 01992 558411

Life policies should be written in trust to benefit client

There are no definitive statistics available, however industry experts and providers believe as few as 6-7% of policies are written in trust.
If true these are incredible statistics due to the fact that it is more often than not in the client’s interest to have the policies written in trust. There are not only direct benefits to the client but also indirect benefits for the adviser arranging the policy.
The trust transfers legal ownership of the policy from the policy holder to the trustees. Now why is this a good thing? Well in short it removes the policy from the holder’s estate. This could save the beneficiaries from paying IHT on the amount, if estate is larger than £325,000.
As the policy is no longer owned by the holder it need not wait for a grant of probate to be paid out. Grants of probate can take considerable time depending on the estate and it is not unusual for it to take up to a year. A trust allows policy to be paid out at time of claim.
Just because the client is giving away ownership does not mean they have less control.
Another bonus to the client is that they can define exactly who benefits from the policy; even state percentage stakes each beneficiary would receive. Especially if there is no will in place the policy may benefit a former partner or an undeserving family member.
The direct benefit to advisers and providers are obvious that the policy is more likely to persist. It is so much harder and costly to source new business than it is get renewals from current clients. The persistency rate dramatically increases if the policy is in trust.
Claw back on commission can be a real pain for financial advisers and many keep high reserves in case the policies are cancelled prior to the term of the policy. This can damage the relationships between the client and adviser especially if the adviser takes action for loss of earnings. They risk alienating future clients by damaging their reputation or a large financial loss.
Recently an adviser, who decided to stay anonymous, settled with a client for £3,000 over this issue. However, legal costs and Fos case fees left him out of pocket. The likelihood of this happening is significantly reduced if the policy is written in trust.
The indirect benefits from writing policies in to trust are that advisers get access to more potential clients. Each trustee is a potential new client. A simple call to explain the expectations of a trustee could be used as a marketing tool.
Breeze and Wyles have developed an online tool, the Trust Wizard, for writing life policies in to trust. It develops a bespoke trust in a matter of minutes based on simple responses during the short fact find. The liability for the wording of the trust is with the law firm. The trust form and return letter can be sent to the client. The forms need relevant people to sign and date. The form is then sent to the provider.

Innovation required in legal service market

Breeze and Wyles have had an incredible 2013, with record instructions due to the competitive pricing mixed with excellent client service. We are looking forward to a better 2014 helping clients directly and advisers provide extended services to their clients.
However, we at Breeze and Wyles can see the changes are required in the legal services market. Solicitors need to be minded that their supply meets the demands on the market. Simply put their needs to be a greater emphasis put on customer service.
We believe the future market changes are exciting and we welcome brokers, planners and advisers to be part of our journey to supply innovative legal services. Our vision involves legal services becoming more customer service driven while fixing costs and automating processes.
Law firms have too long believed that they have a right to work simply because they have a type of degree. Ultimately, clients will play an instrumental role in reshaping the legal landscape and solicitors’ egos may have to take a battering. Firms must be aware of their client needs and drive business accordingly.
The question remains how do law firms deliver high standards demanded by clients? Firms need to answer this question quickly and stop merely talking about innovations. Change will only happen through creativity, bravery and hard work.
To protect themselves from stagnating and sticking to archaic dated practices firms need to be aware of the potential market place. The digital age has led to much opportunity and the legal world needs to take notice. Young professionals are unlikely to walk through the front door so providers need to attract them.
The tide has turned and the Solicitors Regulatory Authority (SRA) are clamping down on firms that are unfit to practice. They announced at the end of November that they had written to 141 law firms across the UK who had failed to secure Professional Indemnity Insurance by the 1st October. The SRA informed those firms that once they have 60 days remaining on their current policies that they will be unable to take instructions from clients and must look at closing their doors.
With all the uncertainty about longevity of firms, you do not want to be the position of introducing your business or clients to law firms either unfit to practice or that could potentially shut their doors. Closures have consequences; clients needing to make alternate arrangements, negative perception on broker firm by association and the client may need to retrieve monies. This is all avoidable.
Make sure that you do your homework before placing business with a firm. Breeze and Wyles are happy to report excellent strength financially and you can rest easy that we will be around for another 100 years to come.

Need for Quality Legal Services

IFAs generally put their faith in solicitors to provide quality legal advice to their clients. However, many individuals find it difficult to judge the standard of advice they are getting because of the professional aura that surrounds solicitors.
Generally the public assume that solicitors have strong technical legal knowledge and that the law is black and white with no shades of grey around areas such as conveyancing and wills. This encourages the notion that the quality of advice from solicitors would be identical across law firms country-wide. This just is not the case, the levels of competency fluctuate across firms and having a legal qualification does not mean that an individual is an expert in all areas of the law.
Due to the rarity of needing legal services during one’s life, clients will often not have the relevant information to make an informed choice about their solicitor. Often relying on personal recommendations from advisers, friends or estate agents. This does not necessarily lead to good legal work and could weakened personal relationship if the service levels are poor.
Consumers are judging quality of solicitors simply from the precedent that they are all competent and idiosyncrasies like how many letters precede the solicitor’s name. They fail to investigate the specialism of the firm before instructing in an area that they may not be competent enough to advise on. The point being that consumers are not generally able to judge whether or not they have a good solicitor. Therefore, they rely on recommendations from trusted professionals and friends.
The overriding factor that defines good quality solicitors is not the advice itself but the service standards that supplement the advice. Consumers like to be treated with empathy, not feeling as if they are just another case file. They envisage an efficient service. Legal work is not cheap and therefore they expect the case to progress smoothly, on time and have clear guidance on charges. Further, legal jargon can be mystifying to even the most intelligible among us, so unravelling in to layman’s terms is essential. All in all a positive client experience is centred around the solicitor’s customer service ethic.
At Breeze and Wyles we understand the clients’ wishes and have put together a conveyancing solution that integrates both great advice and a quality service ethic.

Stressed workers can call for counselling

Employees suffering from depression caused by work-related stress could ask their employers to pay for psychiatric counselling, following a recent ruling by the Employment Appeal Tribunal.
The decision followed a claim brought by Lynda Butcher, the ex finance and reception manager of Croft Vets, a veterinary practice where she had worked from 1996 to 2010. Following a series of promotions in her job during a period of rapid expansion at the practice, Mrs Butcher’s performance started to suffer between 2008 and 2010, and she was relieved of some of her duties.
When she was diagnosed as suffering from depression in 2010, with her GP recording that it was triggered by work-related stress arising during the previous two years, her employers referred her to a psychiatrist for an independent report.
The recommendation of the psychiatrist was for further counselling, suggesting that Croft Vets fund the treatment. When this did not go ahead, Mrs Butcher resigned and brought a claim for unfair dismissal, saying her workload was intolerable and that her employer had ignored the expert recommendation that may have helped her to cope.
The claim succeeded, and was upheld when the employers appealed against the decision, with the Employment Appeal Tribunal ruling that Croft Vets had failed to make reasonable adjustments to help her deal with her depression, and that Mrs Butcher had been unfairly constructively dismissed.
The tribunal said that the employer had failed to make ‘reasonable job-related adjustments’ under the Disability Discrimination Act 1995, and later the Equality Act 2010, to allow her to return to work, which would include providing counselling and psychiatric help, as the illness in this case was caused by workplace stress.
The 1995 Act provides that ‘a person has a disability if he/she has a physical or mental impairment which has a substantial and a long-term adverse effect on his/her ability to carry out normal day to day activities’ and reasonable job-related adjustments include ‘giving, or arranging for, training or mentoring whether for the disabled person or any other person’.
“It’s a judgement that will signal warning bells for employers to make sure they are responding appropriately to mental health issues,” explained Brendan O’Brien of Breeze & Wyles Solicitors LLP. “But it shouldn’t be interpreted as requiring employers to fund private health care, as the issue was not the payment of private medical treatment in general, but payment for a specific form of support to enable Mrs Butcher to return to work and to be able to cope with the difficulties she had been experiencing.”
He added: “It’s worth revisiting how employee reviews are handled if there is any question of work-related stress affecting performance.”
ENDS
Web site content note:
This is not legal advice; it is intended to provide information of general interest about current legal issues.

Avoiding family feuds when you die

Inheritance issues are in the headlines, following the reading of Nelson Mandela’s will, highlighting problems that are becoming increasingly common with the rising number of ‘blended’ families following remarriage.
Commentators have pointed to the international leader’s decision to exclude his second wife Winnie from the will and the restrictions he placed on legacies to some of his surviving children.
Closer to home, the dilemma of getting it right for your family has also been featured in the long-running Archers radio serial, following the reading of Jack Wooley’s will where the bulk of his estate went to his much-reviled adopted daughter Hazel, with a further revelation by widow Peggy of her own plans to exclude well-heeled family members who she thinks can manage without her assets.
Mandela left much of his estate in trust and these can be a simple and effective solution to the problem of providing for a husband or wife in a second marriage, whilst still making sure that children from an earlier relationship do not miss out. They can also be useful where there are concerns about a child inheriting a large amount of cash.
For a couple with children from previous relationships, part or all of their estate can be left in trust for the survivor, and then to their respective children following the survivor’s death. This means that the surviving partner can benefit from the assets – such as staying on in the home or receiving income from investments - but the children will be sure they receive their parent’s estate in due course.
Said wills and trusts expert Hardeep Nijher from Breeze & Wyles Solicitors LLP: “It’s clear that Nelson Mandela had given a lot of thought to the matter. He dealt with many of the gifts before he died, and put money into trust where he thought there might be problems.
“Although many headlines have pointed to Winnie Mandela being excluded, it’s not at all unusual for a first wife to be excluded, as the divorce settlement should have taken that into account. The important thing is to think through what will happen to inheritance for children when there is a second marriage. It can be a bit like having to satisfy two different families, so taking time to discuss the options and making sure everyone knows your intentions – like Peggy Archer has done in the radio serial – can help avoid disputes after you die.”
If there’s a dispute, where a partner or family member was being maintained financially and feels they have not received what’s known as ‘reasonable provision’ in a will, they can bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Any claims must be made within six months of the date of the grant of probate and ideally made before the estate has been distributed. If a couple were not married, then to make a claim the survivor would have to show they were living together throughout the previous two years.
ENDS
Web site content note:
This is not legal advice; it is intended to provide information of general interest about current legal issues.