Cash flow is a vital part of running a successful business. So, when you find that you’ve got a pile of invoices accumulating that are left unpaid, you’ll begin to feel the strain. Unpaid commercial debts can leave you wondering whether you should take some serious action, to recover the money. This may be more so the case if you’re worried about staying in business.
Invoicing with plenty of time for payment deadline and chasing payment just before the payment is to be made, should help keep cashflow healthy. But sometimes businesses tell us that their polite reminders aren’t adequate and the money owed isn’t forthcoming.
Last year JMR Solicitors recovered over £500,000 for small and medium sized enterprises (SMEs) in unpaid debts.
Don’t let pressure destabilise your business – when do you consult a solicitor?
It’s not an easy task, to run a whole business even when things are going smoothly. There are hundreds of things you’re probably thinking about, and debts are another extra added pressure on to your long list of things to see to.
This is when the pressure of running a business can build up to the point where your bills are piling up due to unpaid debt. Often, we see even one unpaid invoice can cause a huge dent in a business’s cashflow.
If you’re in this situation and you’ve come to a point where you’re not sure your business will survive the cash flow problems and outstanding debt, then JMR Solicitors advice is to consult a solicitor about your legal position. The sooner you act on the matter, the better as very often, the problem will not resolve itself.
Don’t spend valuable business development time worrying about the debt – you must do something about it to ensure a satisfactory outcome.
JMR Solicitors can advise you on the most appropriate step to take next.
What action can your business take if it is owed money?
Our debt recovery team are trusted to recover thousands of pounds for businesses. We find that the majority of business debts are straightforward to recover, and often require a small action from a solicitor to prompt payment. From our experience we’ve found these strategies to recover business debt very effective:
- The solicitor writes a “letter before action” on your behalf to the debtor; or
- if the letter before action does not result in payment, we begin court proceedings in the Small Claims Court; or, alternatively,
- in some cases, where the debtor is unable to pay their debts, we may start winding up proceedings or bankruptcy proceedings.
“In so many cases, the first letter from a solicitor will make a business pay up. We call this the letter before action, and it outlines that there is going to be legal action and we talk about the statutory late payment charge, which is amid £70 and £100, while interest on debt, as stated by the Late Payment of Commercial Debts Act, is 8% above base rate. We demand payment within seven days and this usually works in your favour.
“If it doesn’t work, there are two possibilities and it rests on whether the client disputes the debt. If not, and it is a straightforward process where somebody isn’t paying because they haven’t got the money, and the debt is more than £750, you can begin insolvency proceedings,” says Marium Razzaq, owner of JMR Solicitors.
Are you concerned because the debtor is an important business client?
Debt recovery can serve us with a curve ball, where there is more than what meets the eye. For example, we’ve seen situations where:
- the debtor might dispute that all or any of the payment is due;
- the debtor might be complaining about the quality of the goods or services you have supplied; or,
- you might be worried to take legal action, for example, if the debtor is a personal friend, family member or an important customer you don’t want to upset.
Whatever your position, we can help you plan an appropriate strategy to get your invoices actioned.
If your client has contested your claim for money, our litigation solicitors will advise you on the routes to take. We’ll always endeavour to give you advice based on what makes the most commercial sense for your business to survive.
We provide advice and updates at each stage of the debt recovery process including:
- Tracing debtors / credit searches
- All activities prior to the issue of court proceedings including a letter before action
- Court proceedings
- Winding up or bankruptcy petitions
What if your business is the one that owes money?
If your business has asked for good from another company, such as a telephone service, machinery, leaflets etc, and you haven’t made payment in the agreed time frame on the invoice, then it’s vital that you take action or even acknowledge that it’s unpaid.
If you fail to communicate your situation with the creditor, they may assume that you are ignoring their requests for payment of goods and services and end up issuing court proceedings, and even possibly making your business insolvent by issuing a winding up petition.
Realise that ignoring the creditor will only make your situation poorer. Communicate with them to find out if they will extend the time for payment or accept payment from you in intervals rather than a lump sum.
If you feel that the goods or services were not to the standard you required, and therefore you don’t want to pay the full amount, then it’s important to tell the creditor this. They may negotiate a reduction. If you and the creditor are unable to come to an agreement, then JMR solicitors can help mediate to come up with a viable solution.
Contact JMR Solicitors – Litigation Services
If you wish to recover or seek legal advice about debts, contact us by completing the online enquiry form.
Alternatively, call us on 0161 491 3933 or email email@example.com