5 ways to speed debt recovery
It came as no surprise to me that a recent BACS study found SMEs in the UK are owed a staggering £26.3bn in overdue payments. As a debt recovery solicitor, I’m all too aware of the day to day impact late payments have on the Essex small businesses I help. The fact is, cash flow is a struggle when you are kept waiting beyond your stated payment terms. Here’s just a few of the ramifications:
- Forced to pay suppliers late
- Struggle to pay own staff on time
- Have difficulty paying business bills, like energy, rates and rent
- Make personal salary sacrifices to keep cash in the business
There are no hard and fast rules to make sure you get paid. But, there are certain simple things you can do to make it easier to recover money if the person or company does not pay you when they should do.
5 ways to speed debt recovery
#1 Be certain who you’re dealing with
Sounds obvious, right? Actually, we deal with many debt recovery situations where the business owner has taken on the work, without really knowing who exactly it is they are supplying to.
“Joe, in Rayleigh” simply is not enough.
So, make sure you ask the following before you begin:
- Their full name
- The full name of their company
- The full names of any partners
#2 Add detail into the invoice
Your invoice should then include the customers full name, the full name of any partners and the full name and registered address of the company. Your invoice can then be used to your benefit if you do have to bring court proceedings for money that is outstanding.
It should also state your payment terms. For example, 30 days.
#3 Request a personal guarantee
Dealing with a limited company? As debt recovery solicitors, our best advice is always that you ask your customer to provide a personal guarantee. Providing a personal guarantee means that if the business becomes unable to repay its debts, the individual guarantor is personally responsible.
#4 Document bank details
Find out the bank details of the customer you are dealing with. If they fail to pay, and you end up having to issue court proceedings for outstanding money, then you’ll have a means to enforce any county court judgement (CCJ) you may get.
#5 Act quickly
Lastly make sure you do not leave it too long after the money is due to be paid to begin debt recovery. Because the longer you leave it the harder it is to recover the money, and someone else may have got their first.
- Step one: Instruct a solicitor to issue a debt recovery letter
If this does not work…
- Step two: Work with a specialist debt recovery solicitor, on a fixed fee, to ensure speedy recovery of the late payment
Finally, don’t forget if you are owed money by a business and you have to chase it you are entitled to compensation for doing so as well as interest under the Late Payment of Commercial Debts(Interest) Act 1998 (as amended). This should help offset the cost of instructing your local specialist debt recovery solicitor.
Interested to find out more? Look at our recommended reads –
The average late payment debt now stands at £32,185, read more in BACS survey >>
Late payments: A cultural issue for SMEs? This article in Real Business digs a little deeper >>
About TM Law – Specialist Debt Recovery Solicitors
Based in Hockley, Essex, TM Law is a small and dedicated solicitors. With many years’ experience, helping business owners and local individuals with matters of personal injury, compromise agreements, employment disputes, debt collection, commercial disputes and much more.
As a specialist debt recovery solicitors, TM Laws’ knowledge of the debt recovery system available to recover money is second to none, and their approach is proven to achieve maximum recovery for minimum outlay on behalf of local business.
For a personal service, practical advice and quick recovery of your money contact us today. We offer a fair, fixed fee service and we’re always happy to help.