There comes a time, when dealing with unpaid accounts from a client, when a business has to consider taking legal action to recover the debt.
If you have a longstanding legal relationship with a firm of solicitors, they can probably advise you when that point has been reached.
But for most small firms, there is a balancing act to be performed. Luckily, going legal does not necessarily mean launching court action.
As Jonathan Hogg of Wirral firm Guy Williams Layton wrote in CCR Magazine recently, ‘most bad debtors will ignore payment reminders until they see the first legal letter’. At which point, having been paid, the question is do you still wish to do business with this tardy payer?
When it comes to legal matters, Alan Hamblett of Midlands law firm Shakespeares, wrote in the same issue of the magazine, surveys find that ‘the most important factor is confidence based on relationships’. Is your solicitor available to speak when you want help, including out of office hours?
It’s crucial to remember that no enforcement action to recover a debt can be taken without a county court judgment. But there are costs attached that mean you can be throwing money away, if the debt is unlikely to be recoverable.
Hamblett advises, and we’ve said before, that a negotiated settlement should be pursued before you run up court fees. A payment agreement that’s been broken is also compelling evidence to put before a court of your reasonable attempts to achieve a settlement of the debt.
If you’re a landlord in the private rented sector, with growing warnings that some people facing a reduced benefits cap will be unable to meet their commitments, it’s imperative to know your customers and judge carefully whether they have the ability to pay. There’s little point in running up expensive legal bills if a debt will eventually have to be written off.
SJ Collections has long experience in helping to arrange and keep a watchful eye on repayment arrangements, often working hand in hand with lawyers, so don’t hesitate to ask for our help in these matters.