What do I do if I’m owed money? Debt Recovery
Whether you are a business or an individual, trying to claw back money that you are owed is an incredibly time-consuming and frustrating experience.
Many businesses write off thousands of pounds in unpaid debt every year, judging that the time spent trying to recover the money just isn’t worthwhile.
There are steps that you can take to improve your internal credit control systems and successfully recover outstanding payments.
As with most things, prevention is definitely better than cure. Having clear terms and conditions in place and strong credit control processes, implemented by well- trained staff, can go a long way to ensuring you get paid on time and avoid the build-up of unpaid debts. Remember cash is king!
If you do hit problems, and after several reminders payment is not forthcoming, it’s time to begin the recovery process.
As the creditor, you will need to send an individual debtor a ‘Letter of Claim’ or ‘Pre-Action Protocol letter’ setting out an up-to-date statement, and enclosing an information sheet, reply form and financial statement form.
The idea is that this early engagement between parties can resolve matters, avoiding the need for court proceedings. Your debtor has 30 days to respond to your letter.
However, if your debtor is a limited company, your Letter of Claim/Pre-Action Protocol letter will demand payment within 14 days, not the 30 days allowed for an individual.
You can make a county court claim for your money online, filling in claim form N1. You must pay a court fee when you make your claim and might need to go to a court hearing if the other person or business denies owing the money.
For business owners or accounts teams, it can seem impossible to find the time to pursue unpaid debts. It can also lead to sensitive situations if you wish to maintain ongoing relationships with your debtors.
Often the most effective and economical way to resolve matters is to engage a debt recovery specialist. If you are clear with your debtors that your policy is to transfer debt recovery to a third party, they will not be surprised when they receive a solicitors’ letter, but they are likely to be motivated to pay up!
If you have any more questions about debt recovery, please contact us today.