Business Debt Recovery – All You Need to Know
PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.
Cash flow is essential to any business and maintaining it should be as painless as possible. Unfortunately, this is often not the case, with businesses chasing invoices sometimes for months after their due date. Thankfully, businesses who experience this have legal recourse to demand payment of their outstanding debts.
Business debt recovery is the legal process by which businesses can demand payment for services rendered or products provided. Here’s our guide to the process of chasing debts via more official channels, helping to ensure you get the money you are owed.
Get legal help
A first step is to enlist the help of business debt recovery solicitors, who will be able to make outreach to your debtors in a legally compliant way. This involves a debt recovery team sending Letters of Claim to private individuals, which require payment in 30 days. For commercial debt owed by a business, a Late Payment Demand is sent, which can also claim interest, compensation and costs on top of your late payment. This is under Late Payment of Commercial Debts (Interest) Act 1998, the act which governs interest in commercial debt recovery.
What if the debtor still doesn’t pay?
If the debtor still does not pay, the usual next step in the business debt recovery process is court proceedings. Claims under £10,000 are dealt with in Small Claims Court, while claims over £10,000 are dealt with in higher courts. If Judgment in your favour is obtained and the debt is still not paid, then enforcement action will be taken. This can include attachment of earnings, bankruptcy proceedings, or the use of enforcement agents to perform the debt collection.
What happens if the debt becomes contested?
A business debt can also become contested at any stage of the process, which can complicate proceedings. If the products provided or services rendered were deemed unsatisfactory or overpriced, or otherwise considered a violation of an initial agreement, then a debt becomes contested. This can become incredibly complicated as there may be specific legal requirements around that product or service and can result in lengthy litigation.
DFA Law offer a variety of business debt recovery services. We work with our clients to ensure that their debt recovery systems are as efficient and effective as possible. To find out more, call us on 01604 609560 or speak to our experts Richard Forskitt or Paul Currie.