Debt Recovery for Business

The Court will send you instructions on what you must do and by what date. It is important that you do exactly as the court instructs you and that you do it correctly. Any mistakes could prove to be costly. There are a lot of steps the parties have to take even before a case goes in front of a judge. If you contemplate legal action or have to defend a claim against you, you must decide if you want legal representation or not.

Alternative Dispute Resolution could offer an alternative to legal action in appropriate cases. For example Mediation, Adjudication or Arbitration. In some industries you can also refer disputes to specialist Ombudsman schemes.

Most commercial debts will be caught by the Late Payment of Commercial Debts (Interest) Act 1998. This means that even if an invoice is paid one day late, the consequences of the act will be triggered. The Creditor will be entitled to interest of 8% above the Bank of England Base Rate, compensation of between £40 and £100 per invoice, compensation for time spent chasing payment and reasonable costs of obtaining payment.

Sole traders are also covered under the Late Payment of Commercial Debts (Interest) Act 1998 and your options would be the same as any other business, no matter what the size of the business or the size of the debt you are trying to recover.

Yes you can. If you agreed a percentage of interest at the outset with the debtor you will be entitled to charge interest at the agreed rate. If no agreement was made to pay interest on late payments, you can still claim interest under the Late Payment of Commercial Debts (Interest) Act 1998. You can either start recovery proceedings yourself, instruct a debt collection agency or instruct solicitors to assist you with the process. Paying a solicitor to help you will give you the best chance of getting paid but there is a cost to this and you may not be able to recover your legal costs in certain circumstances.

Most commercial debts will be caught by the Late Payment of Commercial Debts (Interest) Act 1998. This means that even if an invoice is paid one day late, the consequences of the act will be triggered. The Creditor will be entitled to interest of 8% above the Bank of England Base Rate, compensation of between £40 and £100 per invoice, compensation for time spent chasing payment and reasonable costs of obtaining payment.

Late payment is unfortunately a commercial reality and part and parcel of running a business. However, any business should ensure that clients who pay late are not allowed to accumulate large amounts of debt before any action is taken. The best way to protect your business is to take action as soon as possible. It goes without saying that having proper contracts and record keeping in place will go a long way to assisting a business if they do have to take legal action against late payers.

Debt collection usually starts with a pre-action letter, also called a letter or demand. The purpose of the pre-action letter is to give both parties an opportunity to state their cases at an early stage. Once the parties have completed the pre-action stage and failed to settle matters amicably the Creditor can issue a debt claim at court if the debt is disputed or start bankruptcy proceedings if the debt is undisputed. Once the matter has been heard by the court and the court gives a judgment in favour of the creditor, the creditor can start enforcement proceedings.