Running a business is not always easy. There can be too much red tape and admin, and not enough time to actually do the work. This is often made worse by customers who are reluctant or slow payers.
Here are a few handy debt recovery FAQs:
What is debt recovery?
This is the process by which unpaid invoices and debts are recovered through a formal court process. Our debt recovery solicitors can guide you through this process and help you with whatever you need.
How do I begin legal proceedings for the recovery of debts?
The first step is to contact a solicitor and have them send the debtor a formal letter requesting that the money is repaid immediately (or within a reasonable timeframe) with legal action being taken if payment is not received. You can decide on a date with your solicitor as to when legal proceedings should begin, in the case that you do not receive the payment. You can choose to send the letter yourself, but it is likely to be taken more seriously if it is sent by your solicitor.
Do you offer a fixed fee scale for small claims?
Yes! To help you manage such claims, PGM have introduced a scheme of fixed fees in small claims cases. The fee scale is linked to the value of the claim, this means that you know your potential legal costs before you start the case and will never be left in a position where you leave with nothing, even if you win the case.
Will I need to go to court to recover debts?
It depends. In cases dealing with uncontested debt recovery claims, the courts will not require you to attend the hearing, except in highly exceptional cases. If the claim is contested you may be required to attend Court to give evidence. If you choose to issue court proceedings after receiving our advice, the process will be handled in its entirety by our experienced team on your behalf.
What evidence of the debt do I need to have?
Ideally you will have a written and signed contract. But you may have other documentary evidence. You will also want evidence that you fulfilled your side of the bargain (e.g. a signed delivery note). It will be helpful if there is clear evidence that you made the customer aware of your terms and conditions before the contract was agreed.
Ensure, also, that you keep copies of any correspondence you send while chasing the debt or attempting to negotiate a compromise.
Discuss the quality of your evidence with your solicitor before taking court action, particularly if there is a dispute over the debt.
Can I charge interest on overdue debts?
Your contract may specify a credit period and how interest will be charged on overdue payments. In addition, commercial debts are covered by the Late Payment of Commercial Debts (Interest) Act 1998. Where there are no written terms of credit, this allows interest to be charged at a set rate which is the Bank of England base rate plus 8% from the end of a notional 30 day credit period.
In practice, however, few firms ask for payment of interest (or debt recovery costs) under the legislation unless the dispute has reached the courts. If you do intend to charge interest and collection costs on overdue debts, your best course is to make this clear, in writing – in your terms and conditions, quotations, acknowledgments, invoices and so on.
Let us chase the debt for you and free up your time to enable you to do what you do best: run your business.
For further guidance, contact us for specialist advice on 01792 468684 or email enquiries@pgmsolicitors.co.uk.
