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Can you collect debts that are more than 6 years old?

The limitation period for collection of debts is 6 years from the date the debt became payable and after that time they may become statute barred.  This means that the debt is no longer recoverable, including by legal action in the courts.

However, it is always worth checking that your debt is actually statute barred.  If any of the following apply, then it might not be:

1. Have any payments been made towards the debt in the last 6 years?
2. Has the debtor contacted you to find out the balance owing or to acknowledge the debt in any way in writing?
3. Has Court action been taken already?

The rule  of thumb is  don’t allow any debt to go beyond 3 months.

For us it’s an easy answer We take on any debt over £600.00 on a no win no fee basis if it passes our criteria of 51% chance of success, but that means you must be prepared to back yourself by paying the court claim issue fee to the court and act as a Claimant in person.

Starting at the beginning, a well written letter can often be all that you need to get your customer to pay. We are the only company who offer a free letter before action via our website. A well drafted letter from you with legal wording shows you mean business and is often enough to ‘wake up’ your debtor into paying. If not then this is where we come in because we are not offering £5.00 solicitors letters, we are pure debt recovery and combine all the facets of contract law knowledge and instinct and application of the understanding of human nature.

Some debts are unrecoverable, which is where our pre acceptance analytical model prove sits worth as we advise people against their potential losses of we cannot collect. We never advise anybody to chase a debt that is unrecoverable as if we do not get your money we do not eat. Some debts require the issue of court proceedings and obtaining a judgment against the customer as the only way to make them pay. We charge the court issue fee plus a £10-£20 administration charge and nobody in the UK matches this offer.

Why £600.00

Only debts that exceed £600 can be transferred up to the High Court and enforced by High Court Enforcement Officers. High Court Enforcement Officers are officers of the High Court of England and Wales responsible for enforcing judgements of the High Court, often by seizing goods or repossessing property. They are paid on a commission basis and are often self-employed so they are as hungry as us and the adage that a hungry fighter is a good fighter has never changed.

We let others chase debts below the £600 threshold, as that uses the County Court. However, due to the County Court receiving so many instructions it can in fact be a slower way of recovering any money owed at the present time. County Court bailiffs are salaried and have a year to undertake three visits to try to recover the debt.

Having said all of this, a solid credit control procedure can be all that is required to avoid the need for debt recovery altogether. So what does this look like?

When a potential client comes to you, they may be very keen to get things moving, but you still need to get the paperwork right. It should be your first priority to set out clearly your payment terms in your contract conditions, particularly in respect of requesting a deposit with any booking. We also advise companies to look at their terms and conditions and are the only debt recovery company who actively seek to stop debts by a full follow up contract law analysis and covering the rights of consumers that prevents the protection of the Late Payment of Commercial Debts (Interest) Act 1998.

Ou experience tells us that in most cases it is worth pursuing your debts. Ideally, your credit control procedures and terms and conditions mean you will not have any issues, but if you do call the professionals and we also offer a free no obligation business debt recovery consultation.

Some offers are too good to be true. All we say is if you want the best chance of getting your monies into your account call the company for an offer nobody else in the UK can match. 

How do I Choose a Debt Recovery Agency

Collecting unpaid monies as a debt can be a difficult and time-consuming process, but the process itself is crucial to the smooth running of your business or organisation. It helps the vital cash flow as cash is king and always will be. If your in-house team is struggling to cope with can’t pay or won’t pay then their time could be more productively focused on other activities, so it may be time to consider using a specialist debt recovery agency.

A professional debt recovery agency can provide valuable support and help you get paid what you're owed quickly and efficiently. You can rely on them for all aspects of debt recovery, from chasing unpaid debts to negotiating payment plans or, in more stubborn cases, instigating legal action the enforcement via the High Court.

Remember, no two debts are the same, so when appointing a debt recovery specialist you are doing more than putting your unpaid monies into their hands; you are also creating a business partnership of trust so ask yourself these questions before making your decision:

1. What is their modus operandi?

Many agencies offer bells and whistles and a cheap one stage letter or 3 stage format to sign you up then seek to pass you on to a solicitor they are in partnership with , or tell you they alone collect debts successfully then spring a large up-front fee on you.  The best debt recovery agencies offer a frere analysis and no up-front fees.

2. Are they regulated?

B2B debt recovery does not require regulation. Only those agencies that collect debts from consumers under The Consumer Credit Act 1974 (CCA 1974) are required to be FCA regulated. All business debt collectors used to have to be registered with the Office of Fair Trading (OFT), but HM Government changed that requirement. The criteria for B2B debt recovery is can the debt be collected successfully and regulation is not required for that?

3. Are you appointing a computerised office?

Many of the agencies who are FCA regulated are merely playing the numbers game  via computer generated 3 stage form letters with a customer service department and they transfer their use of their CCA 1974 letter writing to business debt recovery and forget that analysis is crucial and human beings still have the edge when  analysis is required.

4. Will they take the debt legal for you?

Many of the agencies offer a cheap one stage letter or 3 stage format to sign you up then when it comes to legal action they pass you on to another solicitor they are in partnership with.  The best debt recovery agencies offer no win no fee and a one stop shop services and follow through with in-house legal action as part of their offer.

5. How long have they been trading?

The best debt recovery companies have been around for 5 years + as only those that deliver services that deliver monies for clients can survive when they offer no win no fee as standard.

6. What do the reviews say?

As with any potential new supplier, it's a good idea to Google the company and check out what people are saying about them. That being said, everyone has a few disgruntled customers and some reviews can be unreasonably negative, so you should always take a consensus rather than relying on the first one or two you read. You can also learn a lot about a company from how they respond to any negative reviews or comments.

7. What about testimonials from current clients?

Recommendation is one of the best ways of finding a reliable debt collection agency. Try to talk directly to someone who has used them. It will give you an opportunity to ask questions and assess whether the company is right for your particular needs.

8. Do they have relevant experience for your industry?

Whether you are a small sole trade or a larger company, working with a debt collection agency that understands the commercial environment you're operating is important. That's why it's worth checking out their relevant sector experience.

9. Will they act according to your company ethos?

Just because someone has an overdue debt, it doesn't necessarily mean that your trading relationship with them has irretrievably broken down. They could be suffering a temporary cash flow issue or simply have overlooked the debt. That's why it's vital that the debt collection agency you choose operates with the express instruction you give them and have the flexibility to adapt. They are representing you and your relationships, although a can’t pay or a won’t pay may not be top of any list for a continuing relationship.

10. What levels of communication do you want?

It's important for you and your term to set the reporting levels so there is no ambiguity.

Conclusion

Instructing a debt recovery agency is a big step, particularly if you've always relied on your own staff to take care of credit control. Therefore, the 10 points above should be considered. Whilst nobody can fulfil 100% the criteria of point 8 above AVC Debt Recovery are a name to trust allied to being specialists in contract law and  that is the basis for 100% of all business in the UK.

That allied to common sense and understanding that people agree contracts, so its best that people seek to recover monies.

6 debt collection Fables that are Wrong

Debt collection agencies can be a fantastic resource in the fight against late payment and bad debt. But unfortunately age-old fables about debt collection services exist, scaring many away from using their services. The first one to dispel that is not listed here is the perception of Tony Soprano types from the movies

Employ the right agency and you could recover what you are owed.

Fable 1: It’s Expensive

Fact: Here at AVC Debt Recovery we offer no win no fee a standard and an analysis and consultation for free. Yes a truly free lunch. Therefore we only get paid once we have collected your debt. This will be a percentage of what we successfully recover. The price of our services will be minimal compared to the amount you would lose if you had to write the debt off as uncollectable, and the cash flow implications of it remaining outstanding for longer. Additionally, we have a successful track record in adding fees to get you 100% of the owed debt.

The cost of a call to find out whether you have a collectable debt is a small price.

Fable 2: Customers won’t like it

Fact: We understand that maintaining your customer relationships is extremely important and will take your brand and ethos as seriously as you do, but remember, a won’t pay is not a great customer to have and if someone takes offense to being asked to pay for your hard work you may not want them as a customer. We always seek to remind people the effect their poor payment is having. Although it is true that some might not like the fact you’ve instructed a debt collection agency, you’ve only done so because they haven’t paid you in the first place.

Fable 3: It’s only for big companies

Fact: Any debt over £600.00 will be collected  by AVC Debt Recovery and every company big or small can take advantage of our tenacity.  Using AVC is thinking like a big company and recognising that chasing late payment is not your expertise and is a drain u=on your skill set. When you only have a small team it’s unlikely you’ll have the time or resources to chase late payment without having to neglect key business tasks, such as selling and production.

Fable 4: It’s only for really old debts

Fact: Research shows that the earlier a debt is referred, the more likely it is to be collected. There is always a potential cost trade off, but time always equals better results in this area. You can chase any invoice up to 6 years, but the reality is most debts over 2 years are tough to collect.

Fable 5: A solicitor is more effective

Fact: The reality is that although solicitors must enact litigation in court they can be an impediment as costs are added before you get started and always seek their fees regardless of results. At AVC we work on results and are the gold medal standard of collection as if we do not collect we do not get paid. As such we prioritise recovering the unpaid sums by working your customer, preserving your valuable relationship, before taking the legal avenue, and have the expertise to do so when the time is right. In addition, unlike solicitors, we manage the legal process at no extra cost.

Fable 6: It will damage my brand

Fact: If you do not receive payment for Goods and Services your brand will be irreparably damaged as you will not be able to meet your outgoings. Brands only exist because people pay and here at AVC we will respect and enhance your brand and your right to be paid as much as you do by using our expertise to help you get paid sooner.

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How effective are Business Debt Recovery/Collection agencies?

If your internal credit control or processes are struggling to recover unpaid monies, then getting professional help from a business debt recovery agency could be the answer. But how can you be sure of a successful outcome?

Putting an overdue debt in the hands of a debt recovery agency can seem like a big step, particularly if the debtor is a valued customer. Therefore, when you make the decision to seek professional debt recovery support, it's important to be sure that it's a course of action that can deliver results.

Not all debts are collectable, but a good debt recovery agency will focus on the way to achieve a positive outcomes, especially as the best ones such as AVC Debt Recovery offer no win no fee as standard while acting with the integrity based upon the way you do business. Sometimes, introducing a third party professional is enough to get results. There are many documented cases where the creditor has been chasing the debt for some time without success, yet contact from a debt recovery agency does the trick.

There are a number of factors which can make a significant difference to the potential effectiveness of a debt recovery agency.

Have you taken legal action?

If you have  then the general rule is that a CCJ gives you more leverage, but remember getting a CCJ is often the easy part, which is where a debt recovery agency comes into their ow. As a general rule, good debt recovery agencies advise at point of engagement  of the possible requirement of obtaining having the legal authority of a County Court Judgment (CCJ) and the costs and whether they manage the court process. A CCJ alone may be enough to help persuade the debtor to settle their overdue account.

No sign-up fee

All the best agencies offer no win no fee as standard with a fixed commission rate, whether it takes the agency a single day to recover your debt or an entire year or longer if both parties seek to continue the fight..

Attention to detail

The integrity of a paper trail can be a key factor in a debt collection agency's performance. That means having robust systems in place to ensure your quotations and invoices carry all the relevant information including accurate client contact details and clearly expressed terms of business. Some debts are as a result of faulty admin, rather than a reluctance or inability to settle a debt.

Don't delay

Whilst invoices remain valid for 6 years form issue if you're going to put a debt in the hands of a debt recovery agency, it pays to act sooner rather than later. The longer an account remains unpaid, the more difficult it can be to recover the debt. Over a period of time, a debtor's circumstances can change significantly, as can their status and solvency.

Of course, there will always be industries where debt collection is simpler and more successful. Here at AVC Debt Recovery we use tried and tested methods and expertise as well thinking outside of the box. We also have the legal expertise and persistence. That means you are signing up to create a formidable partnership when you engage us.

We are so confident  in our ability and confidence to get your monies we manage any court issue process at no extra charge save for a £10.00 issue fee with the court.

Nobody else in England  offers that service or has the confidence to invest their legal time.

Whatever the size of your business or the sector in which you operate, we're here to help you get your monies into your account. Not only that but w also offer contract law follow up to help reduce your potential debt issues and reduce your liability

Business Debt Recovery

Starting legal proceedings, whilst  a powerful tool to have in the armoury, should always be the last resort when it comes to debt recovery. That’s because reminding a debtor of their responsibilities, along with the potential consequences of not paying, can often be the catalyst to secure payment. Within correspondence this is done through a document known as a Letter Before Action, or LBA.

However, if you are forced into claiming your monies via the court it in important to be able to show you took all reasonable steps to avoid taking legal action. This is where a good LBA can help you even if it failed to secure payment beforehand. A clearly written LBA will also contain a number of important details in order to give the debtor little or no room for manoeuvre when attempting to defend the action.

Sounds difficult? Well don’t worry because help is at hand. To make sure you get your LBA right, we’ve compiled a list of 12 things to include, and here it is:

1. Ensure you use the legal entity and correct address so the debtor cannot deny receiving the LBA.
2. If sending an LBA by email, always make sure it is a letter attached to an email not just an email.
3. Use your reference code that identifies the works and relates to the works and issued invoices.
4. Similarly, always use their reference if requested.
5. Be certain that you use the correct date(s) of works enacted and invoices issued
6. Make it absolutely clear that you are seeking your monies as debt recovery and quote the relevant Acts and issue a Statutory charge under the relevant Act (s) .
7. Always specify the exact amount that is outstanding.
8. Notify how the debtor can contact you in case the amount owed is disputed.
9. Include a payment deadline and explain the consequences of failing to pay.
10. Also include any details of additional debt recovery fees, interest and/or compensation.
11. Remind the debtor that any CCJ, if obtained, will affect their credit rating.
12. Specify how and where the payment should be made.

With these 12 important points included you should be able to construct an LBA that give you a better chance to get paid the monies you are owed..

Alternatively you can seek to hire a professional such as AVC debt recovery. We are the only company to offer a Free LBA on our website as well as a Free no obligation consultation and offer no win no fee business debt recovery as standard.

Boris Johnson receives County Court Judgment (CCJ) for £535

This headline shocked may people when it flashed up last week, but Boris Johnson isn’t alone in having a County Court Judgment (known as a CCJ) against his name. According to figures from Registry Trust, the agency that records information about County Court Judgments, over 250,000 CCJs were recorded against UK individuals in the first quarter of 2021.

What is a CCJ and what does it mean? Almost all CCJs are money judgments, which means that one party (the debtor) owes money to another (the creditor), either as a result of an unpaid invoice loan or other credit agreement which was not paid back on time, or not at all. In these circumstances the creditor can go to court to issue a County Court Claim against the debtor, which set out that the money must be repaid.

If the Claim is ignored, or is unsuccessfully defended, then a CCJ will be entered against the debtor. All Judgments are entered onto a central register which is managed by Registry Trust on behalf of HM government, and will stay on the register for six years. All the main credit reference agencies have access to the register and will use the presence of a CCJ as one of the factors when calculating credit scores. This is why people are warned that a CCJ may affect their credit rating, which in turn could make it harder to borrow money in the future, take out a mortgage, open a bank account or carry out a number of other services including obtaining  a mobile phone. The register is open, meaning that any other individual or business can also look up details of a CCJ for a small fee.

It was surprising that Boris got one as it was addressed to 10 Downing Street, although Boris does have a history of credit issues as he forgot to change his US citizen status and paid tax to US IRS for a UK house sale. So, what does this mean for Boris? Well, assuming that the Judgment has not been entered in error then the main thing is that more than 30 days have passed since the Judgment was registered. This is significant because if a Judgment is paid off in full within 30 days the debtor can apply to have the CCJ completely removed from the register as if it had never been entered. However, after 30 days, even if the Judgment is subsequently paid in full, the details will remain on the register for six years and will continue to affect credit ratings for that time.

It is unusual for a high profile individual to allow a matter such as this to progress for so long. Even if he was personally unaware of court proceedings, once the CCJ was registered he should have taken prompt action to settle the matter and either have the Judgment settled or, if it was registered in error, applied to the Court to have the Judgment set aside whilst the matter was investigated. No doubt his lawyers are on the case and whilst getting a CCJ removed is not that easy the easiest way is never ignoring any County Court paperwork and if you are a business make sure you tell supplier of your updated address or get mail redirected.

Dealing with Late Payments

A recent survey carried   out of small and medium-sized enterprises (SMEs), concluded that SME owners are concerned about their future. It stated that 54% of business owners felt hat the major reason for the uncertainty over their future was receiving payments late from customers. So how do you, as a business owner, ensure that you reduce this risk in your own business?

1.                            Consider using simple credit check before you offer credit

If they are a Ltd company use Companies House beta for free. If they have no filed accounts then that is a major risk factor. If their previous accounts show a loss then that is a worry. Use a simple account form that requires signature and perhaps references. A quick call to the reference might be prudent. If they are a sole trader do you think they have any money? Nine times out of 10 your gut feel is always right.

2.              Getting your Terms and Conditions right

Align your new customer form with your Ts & Cs. Get crucial clauses in there that set out what happens if monies are paid late. This is the most cost effective way of precluding bad debts. We always cite Amazon as the best example of terms and conditions in action. You cannot make them richer until you agree their Ts & cs.

3.              Consider altering your payment terms

Consider asking for payment up front. Although some businesses may prefer not to do business this way, by requiring payment upfront, businesses significantly reduce the amount of admin involved in ensuring that payments have been made on time, and chasing those which have not. Whilst this approach  may not suit every business do not dismiss it because you might offend someone. Better to find out the customer has no money by them getting offended at point of sale rather then you getting upset when they do not pay.

4.              Communicating with customers

Although your payment terms may be included within your terms and conditions, there is often no substitute for ensuring that you are clear in your communications with your customers. Be clear at the start to how billing works, and follow this up with an email. Always set out the rules at the start of the game. During any works,  if it becomes clear that your scope of work is likely to go over an estimated price (or a price you know the customer is expecting), be sure to communicate this to your customer as soon as you become aware of this. Communicating clearly and concisely will preclude many issues and reduce the chances of late payment and defaults.

5.              Be very clear in your terms and conditions

Your terms and conditions are crucial  in setting out the way you wish to work with your customer(s) Make sure there is a clear lay out of price, payment and late payment; and how invoicing works and when payment is due. That precludes the customer stating they did not know. Ts & Cs are as cheap as £240.00 from CW Contract Law and Legal and will be the best money you ever spend, even better than the £5.00 my father wished he’d bet on Foinavon in the 1967 Grand National.

6.              Make sure you follow up

Monitor your invoices and follow up as soon as an invoice becomes overdue ,so implement a simple system for monitoring payment of invoices. When an invoice becomes overdue someone should have responsibility for following up with this customer, and always use the phone first. It is also important that your business has a defined process for dealing with late payments. An example of such an approach would be:

1. A telephone call
2. An email and always reference the Ts & Cs.
3. A letter setting out that payment is required.
4. A 2^nd letter setting out the options, that includes recourse to debt recovery if payment is not made immediately

Some people are frightened to ask for money, and are frightened of offending a customer, but if they are not paying you then they are the ones who should be sheepish not you. Remember, it’s all about procedure procedure procedure.

7.                            Conclusion

The most important thing to remember is that, while simple common sense structures will not eradicate late payers common sense, diligence, communication, clarity and clear procedures will go some way to reducing the issue of non-paying customers in your business. For everything else there is CW Contract Law and Legal and AVC Debt Recovery.

www.avcdebtrecovey.com

When can a debtor overturn a County Court Judgment?

Creditors often feel vindicated and relief once they receive their copy of the CCJ. It is absolute confirmation that the debtor owes them money and, if the debtor does not repay it opens up enforcement options, although we always warn people that obtaining a CCJ is often the easy part and it isn’t over until the fat lady sings when the money is in your account.

However, before any singing breaks out there are situations when a debtor may take legal action to try to get the CCJ overturned (or ‘set aside’). This can often come as a surprise to creditors, particularly where the debtor has not engaged with the money claim proceedings until this point.

The court will agree to set aside a CCJ if the claimant was not entitled to the judgment, for example, the debtor paid the whole amount before judgment was entered. The court may set aside a CCJ in some other cases, for example, where the debtor has a reasonable prospect for defending the claim or some other extenuating circumstances, notwithstanding that it is very difficult for a debtor to challenge a CCJ if they received the claim form and replied because from the court’s perspective, they should have raised any defence at that point.

There may also be circumstances where the debtor applies to vary the CCJ, rather than to get it set aside. This will usually be the case where they do not dispute the CCJ but cannot afford to pay it all at once or follow the court’s repayment plan. In such cases, the court may agree to make repayments more affordable.

Do you have to go back to court?

If the debtor makes an application to set aside, the court will usually list a hearing which you are obligated to attend.

If the debtor did not reply to the original claim form and you got Judgment in Default, then the court will be obligated to hear the case.

At the hearing, the judge will hear all the evidence then make a decision to:

1. Set aside the Judgment;
2. Dismiss the application; or
3. Schedule a further hearing, which is often the most likely outcome if the debtor has presented a coherent case.

What happens if the County Court Judgment is set aside?

If the CCJ is set aside, you and the debtor will be back in the position you were before you obtained the CCJ in the first place. Any enforcement action you had planned, such as bailiff instructions, would either need to be cancelled or will be put on hold.

The proceedings will usually go back to the claim stage, so the debtor will have the opportunity to respond to the claim and make any offers or put forward any defence or counterclaim.

If you are successful after these proceedings, the court will make another County Court Judgment that you can enforce as normal.

In some circumstances (such as we saw with Boris Johnson), the court may strike out the claim, in part or in whole, as well as set aside the CCJ. This may happen where the court decides:

1. That there were no reasonable grounds to bring a claim;
2. That there has been an abuse of process; or
3. That there has been a failure to comply with a court order or the Civil Procedure Rules (CPR).

A Strike Out Order usually means that your claim has been dismissed, although a claim can sometimes be restored after being struck out.

Therefore getting it right first time and using a debt recovery company such as AVC Debt Recovery to manage the process may be your best option.

Getting Your Monies : Business & Commercial Debt Recovery

Post Covid (not that it is yet post Covid)  every business will be feeling the pinch and some companies will seek to improve their cashflow by restricting your cashflow by paying you more slowly. As a business, it’s important that you get paid what you’re owed by your customers/clients. Late payments, and people trying to avoid paying for goods and services, can be costly to your business and have long-lasting and damaging repercussions.

Here are seven basic tips

1. Invoice as normal

The process for debt recovery should begin with you invoicing promptly and making sure your invoices are correctly issued. Payment terms should have been agreed before any sales or services are delivered so there are no ambiguities.

2. Chase

If it turns out that you haven’t been paid then you should have a process of chasing up the invoice. This could involve you sending additional emails or making phone calls to politely remind the client that they need to pay for the work you’ve completed for them, otherwise the situation will continue to escalate. Here we advise telephone as the first port of call, but a chasing process is a must and make sure you record what you chase and what is agreed from the chase.

3. Credit hold

Do not be afraid of this measure as this is a great prompt. Stop doing any work for them until they have paid their outstanding debt to you.

This is sometimes referred to as a credit hold or administrative hold, whereby work on an account stops due to a lack of funding.

In most cases, this is likely to solve the problem as a business might suffer without the services you are providing to them. However, if this doesn’t result in you receiving your payment then you do have other options.

4. Final notice

The final notice is the last piece of correspondence you’re likely to send the client, before legal proceedings begin. This highlights to them that they have until a certain deadline, which you can decide, to settle any debts with you, before you begin pursuing legal action against them to claim the money you’re owed.

If this final notice doesn’t see your client settle any outstanding payments with your business, then you have different options to pursue when considering legal action.

5. Legal action

Your last resort is to pursue legal action against your customer/client  if you seek to do it yourself whereby you would probably seek the services of the County court via small claims or if it is over £10,000 it goes into a different track; or

6. Debt Recovery

You can hire the experts such as AVC Debt Recovery who will not only seek to pursue your debt, but will give you the advice you require as 66% of County Court judgements never get satisfied (paid). As debt recovery professionals our track record of recovery is much higher.

7. Analysis

This nearly always overlooked once monies have been recovered.

1. Did our sales process have enough focus on who was going to pay me and when?
2. Was my credit checking process robust enough?
3. Did we set out my payment terms?
4. Did our terms and conditions stand up when tested?
5. Did our overall processes stand up to the test?

Learning from the processes above allows us not to repeat errors. Any business will be lucky to escape without a bad debt, but having issues then repeating them by only focusing on the sales element is not failing to plan it is planning to fail.

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Can a Debtor overturn your County Court Judgment?

In May, 2021 we reported the news that the Prime Minister, Boris Johnson, had become the subject of a County Court Judgment for a debt of £535.

However, before questions about what would happen if County Court bailiffs turned up at Number 10 Downing Street their lawyers took action and the Judgment was set aside, and the debt claim struck out (i.e. it was dismissed, whether they sought and obtained legal costs against the creditor was never reported).

As an individual or business dealing with unpaid debts, you might wish to understand that it is possible for a debtor to get a claim struck out even once a CCJ has been granted.

Although every creditor (bar the one who did file against BJ) do not have to worry about facing off against Downing Street lawyers in their debt recovery claims, we set out some brief circumstances in which a debtor can overturn a County Court Judgment once it has been made.

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Debt Reminder Letters – Step by Step Approach

The aftermath of Covid 19 will be used as an excuse by some companies to pay even further beyond terms or in some case to seek not to pay at all.

If you consider yourself the kind of business that finds it difficult  having to deal with customers or clients who have an outstanding account or an unpaid bill that needs collecting, then you not alone. It is a fear of upsetting someone or losing a customer for daring to ask for what is yours affects many people in business.

No one likes to risk destroying customer goodwill by having to request assertively or demand payment, but in many cases, there is no other option.

Before you find yourself having to go down that route though, there are steps you can take beforehand to try and avoid the situation escalating to such a level.

Ensuring that payment due by dates and terms are clear, and also indicating any interest that will be applicable if payment isn’t made by the date agreed will go a long way to helping this part of your business run a lot smoother.

These should be clear in your Ts & Cs and we say to all natural salespeople who run businesses: ‘Never be frightened to set out what payment terms are at points of sale’.

Even taking these steps can’t guarantee that you won’t run into issues, and when that happens you’ll want to take an approach that is both firm, but doesn’t run the risk of souring relations with a valued client or customer.

Step 1 - Keep It Friendly & Informal

The first step should be to issue a short, friendly reminder along with another copy of the invoice and use the telephone alongside email and letter.. Many times an unpaid bill can be a result of the client simply forgetting. We all know that running a business is time-consuming, and it’s easy to forget what needs paying on what date. In most cases this will result in an apology and payment being made, which is the ideal outcome.

If payment isn’t made within a few days of the letter being delivered, a more direct approach may be required.

Step 2 - Be More Direct

Your second letter should be a bit more formal, and with directness replacing the friendly tone of the first notice you sent them. At this point, the failure to pay what is owed can’t be put down to forgetfulness.

Step 3 - Introduce The Threat Of Legal Action

If payment still isn’t forthcoming, you’re going to have to get tougher, laying out a set date by which payment must be made otherwise legal action may be the result. Usually, payment within seven days is a more than reasonable demand, giving the client time to read the letter and act upon it.

Step 4 - Issue A Final Notice

If the threat of legal action hasn’t prompted payment to be made, then you issue a final notice demanding payment and setting a date whereby legal proceedings will be launched against them.

One piece of advice that will prove valuable is to not lose your composure or get personal when writing these letters. It won’t make you feel better, but will definitely lose you the customer whereas the law is respected ,so keep it on point at all times.

If you find this process draining and it is taking valuable away from your business expertise and skills as well as other customers then the best option is going directly to a reputable debt collection company who can take the stress and hassle away from you. They also have far more experience in these matters and know how to approach such clients in a manner that will see a speedy and satisfying result. You may not recover 100% of your money, but 80%-85% of something (your money) is always better than 100% of nothing.

Free Debt Recovery Tips

Richi Sunak has set out a Winter Economy plan, but this will not stop the fallout that the Coronavirus outbreak has created which has  torpedoed the finances of thousands of successful and healthy businesses across the UK. 

Consumers have tightened their belts, clients have cancelled orders and debtors are slower or unable to pay. The impact is widespread and cuts deep.

Whilst many companies will continue to be able to pay their invoices and debts there will be businesses and individuals in business who will seek to become slow payers or worse still non payers.

Increasingly, businesses are trying to understand their debt recovery options and whether the use of profession debt recovery agencies is a better way forward whilst the ned to focus on sales is paramount.

6 debt collection Fables that are Wrong

Debt collection agencies can be a fantastic resource in the fight against late payment and bad debt. But unfortunately age-old fables about debt collection services exist, scaring many away from using their services. The first one to dispel that is not listed here is the perception of Tony Soprano types from the movies

Employ the right agency and you could recover what you are owed.

Fable 1: It’s Expensive

Fact: Here at AVC Debt Recovery we offer no win no fee a standard and an analysis and consultation for free. Yes a truly free lunch. Therefore we only get paid once we have collected your debt. This will be a percentage of what we successfully recover. The price of our services will be minimal compared to the amount you would lose if you had to write the debt off as uncollectable, and the cash flow implications of it remaining outstanding for longer. Additionally, we have a successful track record in adding fees to get you 100% of the owed debt.

The cost of a call to find out whether you have a collectable debt is a small price.

Fable 2: Customers won’t like it

Fact: We understand that maintaining your customer relationships is extremely important and will take your brand and ethos as seriously as you do, but remember, a won’t pay is not a great customer to have and if someone takes offense to being asked to pay for your hard work you may not want them as a customer. We always seek to remind people the effect their poor payment is having. Although it is true that some might not like the fact you’ve instructed a debt collection agency, you’ve only done so because they haven’t paid you in the first place.

Fable 3: It’s only for big companies

Fact: Any debt over £600.00 will be collected  by AVC Debt Recovery and every company big or small can take advantage of our tenacity.  Using AVC is thinking like a big company and recognising that chasing late payment is not your expertise and is a drain u=on your skill set. When you only have a small team it’s unlikely you’ll have the time or resources to chase late payment without having to neglect key business tasks, such as selling and production.

Fable 4: It’s only for really old debts

Fact: Research shows that the earlier a debt is referred, the more likely it is to be collected. There is always a potential cost trade off, but time always equals better results in this area. You can chase any invoice up to 6 years, but the reality is most debts over 2 years are tough to collect.

Fable 5: A solicitor is more effective

Fact: The reality is that although solicitors must enact litigation in court they can be an impediment as costs are added before you get started and always seek their fees regardless of results. At AVC we work on results and are the gold medal standard of collection as if we do not collect we do not get paid. As such we prioritise recovering the unpaid sums by working your customer, preserving your valuable relationship, before taking the legal avenue, and have the expertise to do so when the time is right. In addition, unlike solicitors, we manage the legal process at no extra cost.

Fable 6: It will damage my brand

Fact: If you do not receive payment for Goods and Services your brand will be irreparably damaged as you will not be able to meet your outgoings. Brands only exist because people pay and here at AVC we will respect and enhance your brand and your right to be paid as much as you do by using our expertise to help you get paid sooner.

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Small Business Debt collection

Keeping on top of late-paying customers or clients is crucial for business success. There have been several studies which highlight the problems caused by late payments. Research suggests that around 76% of all UK businesses are being paid late and it may only get worse. This can place businesses into serious financial difficulties, and perilously close to becoming insolvent. The Federation of Small Businesses have long shouted about the need to end the late payment culture, which is a very real problem impacting the majority of businesses in the UK.

Small business credit control/debt collection is an important part of the way we work as we are one of the few debt recovery companies that look at the debt the reasons for the debt and better ways to stop debt issues. Whilst our remedies effectively put us out of the business of business debt recovery, we seek to be proactive in preventing bad debts accruing and minimise the disruption (and maximise the return) when they do.

How to keep late payments to a minimum

Completely avoiding late payments is never realistic (even we get them) but there are ways you can minimise it.

Here is our checklist for effective credit control:

1. Have a clear credit control procedure.
   1. Invoice promptly.
   2. As soon as payment is late pick up the telephone as this will tell you whether there is an issue will help to flush out any disputes or problems with the invoice.
   3. Follow up with a letter
   4. Follow up in 3 days with a telephone call and get a fixed date for payment
   5. If this is not adhered to  send a stern letter or LBA demand for payment
   6. If nothing is received pass the debt over for small business debt collection. Do not delay.
2. Get some Terms and Conditions and use them.

1. If it’s good enough for Amazon a t he world’s most successful company then it should be good enough for everybody.
2. Do not trade without sending your Ts & Cs.
3. Do not have  set? Visit www.cwcontrcatlaw and legal .co.uk for a set for around £240.00
4. Always confirm an order with an email that clearly satte4s. Please find attached a set of our Terms and Conditions and always send you Ts & Cs last.

3. Know your customer and obtain as much information about them as possible at the outset.
   1. Who exactly are you contracting with? A sole trader, a limited company or a partnership? Simply having the name of the business e.g. the shop name or restaurant name is not enough. You need to know the entity which you are contracting with
   2. Credit check customers where possible.

How to keep a good relationship with your customers when dealing with debt

It can be tricky dealing with late payments, but if someone is offended by you asking for money which they agreed to pay you on a certain date we wonder whether you can afford them as a customer.

By using a specialist professional agency such as AVC Debt recovery you can depersonalise the collection process and play good cop bad cop.

Inform debtors that the last thing you wish to do is pass the matter on.

In most cases, threatening us of debt recovery won't do any damage to your business relationship; but if it does you may consider you can afford not to be a busy fool.

Of course, debt recovery is not a free lunch and despite what some companies say the average recovery of the index debt is around 85% , but in most cases AVC Debt recovery recover 100% of the index debt thanks to HM Government late payment law.

Small business debt recovery: issuing a County Court Claim

If no payment or response is received during the pre-litigation stage, then recourse can be sought via a County Court Claim. Taking a customer to Court can be a difficult decision and AVC Debt recovery are one of the few companies that manages the debt recovery legal process at no charge.

There are pros and cons:

Pros:

1. The debt may be taken more seriously by your customer when they receive a claim from the Court
2. It is a relatively cheap way to pursue the unpaid invoice as the Court fee varies from £60.00 to 5% of the value of the claim, dependent on the claimed amount. This fee is recoverable from the debtor, should you be successful
3. The claim often acts as an incentive for the debtor to pay
4. They do not want to spend time and money defending the proceedings
5. They do not want a Judgment to impact their ability to gain credit
6. There are many ways of enforcing the Judgment, depending on the debtor's circumstances.

Cons:

1. It is not an exact science. Only a fool seeks to sit in front of a Judge if there is a better way.
2. The claim itself may not result in payment. We always say the easy part is obtaining judgement.
3. The debtor may still refuse to make a payment or ignore the claim. If this is the case, we will need to proceed to enforcing the Judgment
4. The debtor may defend the claim, which could lead to complex proceedings
5. Enforcement of the Judgment is not always successful. Numerous factors come into play, such as the debtor's assets/finances, or the debtor's employment status.

What happens if a debt is defended?

We take on your case with the creditor as the Claimant in person. We have  a 90%-win track record in court cases.

Enforcement of your Judgment

If we are successful with your claim for unpaid invoices you will obtain a County Court Judgment, which is an enforceable Court Order. This will usually order the debtor to make payment of the debt, interest and costs immediately.

As we only take business debts on that are above the High Court enforcement threshold, we enact enforcement via the High Court.

Insolvency

We also seek recourse to insolvency procedures.

Why use a debt collection for a small business service?

Using a debt recovery service, which is based around the analysis of the law of contract  means you have expertise and experience on your side. Typically, using our modus operandi means the chances of recovering the monies owed to you are greatly improved, as debtors will often take the claim much more seriously after receiving a claim from us. Chasing debtors is a time consuming and potentially frustrating part of running a business. From small debt recovery services to dealing with large amounts of unpaid debt, passing your unpaid invoices over to a debt recovery agency will give you peace of mind that the debtor is being chased for payment, whilst you continue with the day-to-day running of your business.

Take Back Control of your Invoice Revenue

Unpaid invoices are unfortunately a common occurrence for any business owner. In fact, 52% of businesses reported experiencing late payments in 2022 in a report by the Federation of Small Businesses. It will only get worse

It is crucial that you get paid what you are owed by your customers and clients on time, whether it's a one-off client or a retained contract. Customers not paying or trying to avoid paying for goods and services can be costly to your business and have long-lasting and damaging repercussions.

What to do when someone doesn’t pay

1. Invoice as normal

Make sure that you send a correctly issued invoice that contains all the information clearly set out that contains all the relevant information including any payment reference or job number if requested. Include:

a.Your contact details

b.A clear itemised description of what your charging for and amount charged (typically itemised). Segment out goods and services and any ancillary charges that are agreed and date of any agreement

c.Payment terms and information, including due date

d.Try and standardised you invoices using a template format to preclude basic errors..

2. Chase for payment

It’s common for invoices to have a payment term of ‘X’ days stipulated at the bottom. If it turns out that you haven’t been paid by a Client when you were expecting, then you should begin the process of chasing up the invoice as soon as possible once the stated payment period has lapsed. One tip, never use ‘immediate’ as payment terms as this slows down any credit control process.

Make a phone call alongside an email as a reminder to politely remind the client that they need to pay for the work you’ve completed for them. If nothing then write a letter and send it via email and remind the Client of the law of later payment and interest and Statutory Charges. Combine telephone calls with emails and letters. Never use email in isolation.

3. Have a defined process for collecting monies overdue.

Sounds simple, but writing down a process aids any money collection.

3. Use a credit hold

Tell the Clinet you are stopping work, (but put it in writing) or doing any further work for them until they have paid their outstanding debt to you. Use phrases such as credit hold or administrative hold. Keep any emotion or threat out of any letter. Always use a letter for this.

In many cases, this will solve the problem as a business might suffer without the services you are providing to them. However, if this doesn’t result in you receiving your payment then you must look at other options.

4. Send a letter before action

A letter before action is the last piece of correspondence you’re likely to send the Client before legal proceedings begin. This highlights to them that they have until a certain deadline to settle any debts with you, before you begin pursuing legal action against them to claim the money you’re owed. You can decide on the length of time given to a debtor that is a business, but the Court will expect the debtor to have been given a reasonable period of time, which is usually thought to be at least 14 days. In the case of an individual debtor, they must be given at least 30 days to settle the debt or otherwise respond.

5. Either Take Legal action or engage a Debt Recovery Specialist such as AVC Debt Recovery

Your last resort is to pursue legal action against your Client, but the legal process has strict procedures and pre-action protocols .

Here at AVC Debt Recovery we offer a free no obligation consultation on debt recovery. Remember, not every debt is recoverable (for whatever reason) and getting a  court Judgemnet is often the easy part. If a debt can be collected AVC Debt  Recovery can collect it. A good debt recovery company will not ask you for monies up front or promise you any guarantee of success as the world we are living in is being built on debt by governments, so it is not an exact science, but hiring the best who only take a fee at the back end if they win is rare in today’s world.

Finally

Take a look at your terms and conditions and if you have none then take a tip from one of the richest men in the world who owns Amazon. He will not let you make him richer until you agree his terms and conditions, so adjust the way you agree Ts & Cs. Even those who work only via text can use our Ts & Cs methodology that contain powerful anti debt clauses.

Changes to UK insolvency laws

The Government is keen to maximise the chances of survival for businesses during the current pandemic, and the proposed amendments to the corporate insolvency and governance bill will mean that any business struggling will be given an opportunity to make the necessary adjustments to optimise their chance of survival.

Business Secretary Alok Sharma said:

“This is a particularly challenging time for businesses right across the UK, and we are doing all we can to support them through this period.”

“Our proposals have been widely welcomed by business groups. The Bill will help companies that were trading successfully before the COVID-19 emergency to protect jobs and put them in the best possible position to bounce back.”

The measures that the government are intending hoping to put in place swiftly include placing a temporary restriction on winding up orders and petitions.

The bill also makes three further permanent changes to UK insolvency laws and these include:

1. A new moratorium
2. Termination clauses
3. A new restructuring tool

The new moratorium

This newly introduced moratorium gives businesses that are likely to become insolvent the ability to apply for a 20-business day moratorium, this period is extendable to 40 days with further extensions available if the creditors or court agree to them. The extendable period will enable the business to continue trading with oversight from the insolvency practitioner.

Landlords will be prohibited from forfeiting leases during this period.

Prohibit termination clauses

Any clauses that prevent suppliers from stopping supplying a business or asking for additional payments when a company is undergoing difficult times will be prohibited.

A new restructuring tool

Struggling businesses will be able to put forward a proposal to creditors and members. Creditors will be bound to the restructuring plan.

Removal of threat of personal liability

The bill will also temporarily remove the threat of personal liability for wrongful trading from directors who try to keep their companies afloat through the emergency.

Extension of deadlines

The deadlines for any filing will be extended and businesses will be given flexibility to communicate with members electronically where necessary.

Jonathan Geldart, Director General of the Institute of Directors said:

“Directors have significant legal obligations, and this Bill provides some reassurance that those who act responsibly won’t be caught out by the insolvency system. It’s crucial that directors are able to sustain their organisations and the people who rely on them during these difficult times.”

You can read the full Government press release here.

https://www.gov.uk/government/news/government-introduces-legislation-to-relieve-burden-on-businesses-and-support-economic-recovery

What is a Contract Review?

A contract review is a thorough examination of a legal agreement before it is signed to ensure that everything stated in the document is clear and accurate, and that your company is comfortable moving forward according to the terms of the agreement. Once the contract is signed it is important that regular reviews are conducted and the provisions of the deliverables within are looked at. A contract should not just be about legal clauses it should contain ways of working that cover the way people work together. A contract review during the term helps improve your business.

What to Look for During a Contract Review

When conducting any contract review start with a plan or a wish list so you will be sure the contract will be an enabler not an impediment to your business. If any errors or discrepancies are discovered, or any questions arise as a result of the contract review, you should look at changes and redrafting  to ensure any potential conflicts have been resolved.

Here are some of the key things to look for during a contract review.

1. Key Clauses & Terms

Every line in a contract is important and needs to be reviewed closely, but some clauses and terms are clearly more significant than others. Since every company and industry is different, the most important contract terms are likely to vary as well, but there are a few to pay close attention to across the board. Terms like confidentiality, indemnification, termination, and dispute resolution are all important sections in a contract and are worth spending extra time reviewing to fully ensure the language is acceptable.

2. Termination & Renewal Terms

Before signing any legally binding agreement, you’ll want to confirm that you completely understand the contract’s termination and renewal terms to avoid getting locked into an agreement longer than you originally anticipated. You should check on things like automatic renewal language and opt-out windows so you know up front how and when you can cancel the agreement and what the repercussions are of not notifying the other party by a certain date.

This is also a good time to start planning ahead so you don’t get caught off guard when those important dates and deadlines come around. Set calendar reminders so you and your team don’t miss opportunities to renegotiate or cancel the agreement within the stated parameters.

3. Clear, Unambiguous Language

As you read through a contract, pay close attention to how each sentence is worded and look for language that could be left up to interpretation. Even if both parties interpret unclear terms the same way, it’s best to revise the language to be more cut and dried if possible to prevent potential conflicts once the contract is signed and active. Significant conflicts may require a third-party to determine next steps based on how they interpret the contract, so be sure all terms are laid out explicitly.

4. No Blank Spaces

Using contract templates is a great way to save time during the contract drafting process, but requires special consideration during the contract review phase. Any blank spaces should be either filled in or removed before the final contract is signed. Depending on the circumstances, failure to fill in a blank space in your agreement could lead to costly consequences for your business.

5. Default Terms

While both parties typically have good intentions when entering into a contract, it’s always a possibility that one side won’t deliver according to the terms of the agreement, leading to a breach of contract. Keep an eye out for default clauses so you know the potential ramifications of not fulfilling your obligations - or the options available to you if you’re the non-breaching party.

6. Important Dates & Deadlines

In addition to ensuring that all of the dates and deliverables listed are in alignment with any previous verbal agreements, the contract review stage is also an opportunity to start tracking anything your team or organization is responsible for executing. Planning ahead will help reduce the chances of a breach of contract, which could lead to significant consequences for your organization.

Tips for Success

Allow Enough Time for a Thorough Review

Reading and analysing every sentence in a contract can undoubtedly take a considerable amount of time, especially for lengthy, complex agreements, but it’s a critical step to protect your business from unnecessary risk. Always leave plenty of time to sit with high-value or high-risk contracts before signing. One misplaced comma or ambiguous sentence could lead to costly, and avoidable, mistakes.

Have Multiple People Review

It’s always a good idea to have someone other than the person who drafted the document conduct the contract review. Someone reading a contract for the first time is more likely to catch an error or typo than the person who drafted the contract and has been looking at the same information for a long period of time. Having a second member of your legal team, or even a contract review lawyer, review each important agreement will increase your chances of executing a contract that delivers as intended.

Review Contracts on a Regular Basis

Contract reviews should take place for existing agreements in addition to brand new contracts. Any time you’re preparing to renew an agreement, you have an opportunity to improve the contract based on lessons learned since the last time the contract was signed, fix something that was previously overlooked, or change language as a result of industry regulations or guidelines that have evolved since the contract was originally drafted. The fact that an agreement was signed and accepted initially shouldn’t prevent you from regularly reviewing and looking for opportunities to optimize or refine the terms, or taking steps to terminate the contract in certain situations.

Take Advantage of Technology

Conducting a thorough, line-by-line analysis of a written document is a challenge tailor made for modern technology solutions, particularly tools powered by artificial intelligence and machine learning. Contract review solutions, including some contract management software, offer the ability to automatically scan and analyse large volumes of text quickly and accurately, and unlike humans, aren’t susceptible to errors caused by fatigue, which is a legitimate concern when reviewing lengthy contracts.

Technology should not replace the human review process, but when used to supplement human efforts, contract review solutions can help individuals responsible for this process accomplish the task much more efficiently and accurately.

For us it’s an easy answer We take on any debt over £600.00 on a no win no fee basis if it passes our criteria of 51% chance of success, but that means you must be prepared to back yourself by paying the court claim issue fee to the court and act as a Claimant in person.

Starting at the beginning, a well written letter can often be all that you need to get your customer to pay. We are the only company who offer a free letter before action via our website. A well drafted letter from you with legal wording shows you mean business and is often enough to ‘wake up’ your debtor into paying. If not then this is where we come in because we are not offering £5.00 solicitors letters, we are pure debt recovery and combine all the facets of contract law knowledge and instinct and application of the understanding of human nature.

Some debts are unrecoverable, which is where our pre acceptance analytical model prove sits worth as we advise people against their potential losses of we cannot collect. We never advise anybody to chase a debt that is unrecoverable as if we do not get your money we do not eat. Some debts require the issue of court proceedings and obtaining a judgment against the customer as the only way to make them pay. We charge the court issue fee plus a £10-£20 administration charge and nobody in the UK matches this offer.

Why £600.00

Only debts that exceed £600 can be transferred up to the High Court and enforced by High Court Enforcement Officers. High Court Enforcement Officers are officers of the High Court of England and Wales responsible for enforcing judgements of the High Court, often by seizing goods or repossessing property. They are paid on a commission basis and are often self-employed so they are as hungry as us and the adage that a hungry fighter is a good fighter has never changed.

We let others chase debts below the £600 threshold, as that uses the County Court. However, due to the County Court receiving so many instructions it can in fact be a slower way of recovering any money owed at the present time. County Court bailiffs are salaried and have a year to undertake three visits to try to recover the debt.

Having said all of this, a solid credit control procedure can be all that is required to avoid the need for debt recovery altogether. So what does this look like?

When a potential client comes to you, they may be very keen to get things moving, but you still need to get the paperwork right. It should be your first priority to set out clearly your payment terms in your contract conditions, particularly in respect of requesting a deposit with any booking. We also advise companies to look at their terms and conditions and are the only debt recovery company who actively seek to stop debts by a full follow up contract law analysis and covering the rights of consumers that prevents the protection of the Late Payment of Commercial Debts (Interest) Act 1998.

Ou experience tells us that in most cases it is worth pursuing your debts. Ideally, your credit control procedures and terms and conditions mean you will not have any issues, but if you do call the professionals and we also offer a free no obligation business debt recovery consultation.

Some offers are too good to be true. All we say is if you want the best chance of getting your monies into your account call the company for an offer nobody else in the UK can match. 

Insolvency rules in the time of coronavirus

The outbreak of the coronavirus has seriously affected the UK economy in recent weeks. Many businesses are being confronted with serious commercial considerations while others have been forced to stop trading altogether. On 28 March 2020, the Business Secretary Alok Sharma, provided a lifeline in the form of new insolvency measures to help those people and businesses that find themselves struggling financially.

What is insolvency?

When a company is solvent, meets its financial obligations to creditors, and pays debts when they become due, directors must act in the best interests of the company and its shareholders. However, if the company fails to perform these obligations, then the company becomes “insolvent”, changing the scope of duties of its directors. In such cases, the responsibility of directors shifts to the company’s creditors and, in certain cases, employees.

Failure to do so generally qualifies as “wrongful trading” under the Companies Act 2006  and may lead to a series of sanctions, including a disqualification for up to 15 years or even criminal penalties.

How have the insolvency rules changed?

In the wake of the coronavirus, there have been a few proposed changes to the previous insolvency rules to ease the stress on businesses.

The temporary suspension of wrongful trading, applied retrospectively from 1 March 2020, allows directors to continue trading, despite insolvency, without the threat of personal liability. This measure will continue for three months.

Another introduced measure is postponing lender action for companies who are approaching insolvency. This short pause (or “moratorium”) has been established to ensure that companies are not approached by their lenders while trying to restructure their debts or waiting for a business rescue.

Companies who are insolvent will still be able to access supplies (raw materials, component parts, etc.) in order to continue trading during the moratorium and remain financially afloat.

To ensure that lenders continue to be paid while the parties seek a solution, the government has provided a new restructuring plan with certain safeguards, the details of which are still being developed.

Bottom line

As we find ourselves in times of uncertainty, these new changes will enable businesses to pause and plan how to continue operating in the future. From new access to essential supplies to continued trading, directors and companies should keep these new rules in mind while weathering this economic storm. What it will not do is preclude any company paying its invoices as they become due or stop debt recovery.

Implementing an effective credit control process

As at today and every day Cash is King. It’s not a cliché. You can run a business without profit, but you can’t run it without cash.

In these unprecedented times many businesses are unsure of what will happen when the current lockdown is lifted and business starts again. Some companies will seek to start all over using their tried and tested methodologies of cash collection, but things may have changed and the potential for late payers to become bad debts will definitely increase. During this down period, it might be prudent to look at your future credit control procedures.

Credit control is one of the many components needed for an effective business model, but implementing an effective credit control process can be a difficult task as it may involve change and managing change. When asked to look at  any issue we look at some of the key strategies for success.

1. Research current and new clients

Simple research is pivotal in credit control because it allows a business to assess the risk that an existing client or prospect could pose in terms of making payments. A simple credit check via companies house beta is free and many serial offenders have dissolved companies yet are offered credit the day after they shut a company down. A cost option is something like Experian Business, which  provide full credit reports on any business and it can help with a risk assessment. These reports allow you to gain clarity into who you're doing business with, and if they have a history of bad credit and payments.

2. Act on the information.

Don’t let the carrot of a sale and more work cloud you into forgetting that big stick that will beat you if you do not get paid. swiftly

3. Issue terms and Conditions

Sounds simple. Issue your terms and conditions, not a culled copy form Joe Bloggs Does it Best from the internet (we see this every day). You can get a bespoke set for as low as £240.00 from a reputable legally insured company such as CW Contract law and Legal. Don’t plan to fail by neglecting the most powerful legal document in contract law.

4. Get any Issued contract Checked

You can have this done for as little as £90.00. Ok, so none of us ever read the Amazon contract we tick, but we have seen horror documents with no rights of termination and other nasties that invoke open ended liability and the wrong party paying the costs of the other parties legal action on the other side’s breach of contract.

5. Track and Manage

Keeping track of clients does not have to be onerous. Effective communications and effective business relationships (personal one’s as well)  – are built on trust and transparency. Something as simple as a courtesy call or reminder email could be as much appreciated by your customer as it is at your end. In addition to tracking, you also need to manage the days that debts are allowed to go overdue before further action is taken. It’s a good idea to cultivate an understanding of how different payment amounts and time scales are met and the average time taken by a debtor to pay different amounts that are due. This data will also allow you to prioritise specific invoices and from there you can also consider outsourcing some of your more difficult debt chasing to a third-party service provider.

6. Involve the whole team

If you are  a one-man band involve yourself., otherwise communicate the message internally and remember you are only as strong as the cash being collected. Use simple practices via KISS to explain to everybody who is involved in a sale (even a note to self) that explain step by step how to issue invoices and what the standard follow-up process for chasing invoices is. We find that the companies who use what we call  KISS and show procedures use the services of debt recovery agencies far less. That gives you more cash as no debt recovery agency works for free as no win no fee payment is nearly always paid by the creditor.

7. The right tools

If you attempt carpentry with blunt chisels you will get the job done but not as well and it will take more time, so why approach cash collection the same way Finding and suing the right tools to meet your businesses cash flow requirements can be an important piece of the puzzle in effective credit control management. While advanced software is becoming increasingly integral to credit control departments, it’s essential not to over complicate the process and to find the right tools for you. A simple process and a spreadsheet is just as effective, but we eschew the back of a fag packet. Anything that is simple and works for you and simplifies the process and gets you more cash is the right process.

Ultimately, implementing an effective credit control process is about thinking about the entire journey from invoice creation, to client communications, to how to deal with late payments. Here at CW Contract Law and Legal and AVC Debt Recovery we are on-hand to help you with this every step of the way, and you can find out further information on our transparent and ethical service at our websites and for our delivery of contracts, debt recovery and terms and conditions. 

Is Your Business losing money by failing to use the Late Payment law?

Late payment remains one of the biggest problems for UK businesses. However, late payment law is available to protect businesses from late paying customers. We liken not using late payment legislation to  HM Government deciding not to bother collecting speeding fines in case they upset motorists..   

What is late payment law?

Under the Late Payment of Commercial Debts (Interest) Act 1998 and subsequent amendments, companies can claim interest and also receive fixed sum compensation if a payment is not received or if a payment is late. Although it is only applicable to business transactions, the aim of the Act is to discourage the culture of late payment.

When is a payment late?

If your commercial contract specifies a date upon which payment should be made then it will be considered late if it is not received by this time. However a company that isues immediate payment terms would probably not be able to issue a late payment penalty on every invoice.

We always say that payment terms should be set out at point of sale, but if a commercial contract does not state when payment should be made, the Late Payment of Commercial Debts (Interest) Act 1998 comes into force. Under the law, payment must be made within 30 days of either the invoice being received; the goods/services being received or the goods/services being accepted. If payment is not made within this timeframe, it is classed as late.

How much compensation can I claim?

Late payment compensation can be added to each qualifying debt. The following fixed sums can be claimed as compensation

•           £40 compensation for invoices up to £1,000

•           £70 compensation for invoices between £1,000 - £10,000

•           £100 compensation for invoices over £10,000.

If you have several invoices that are outstanding, the compensation you can claim could be significant.

How much interest can I claim?

Late payment interest is typically claimed at 8% above the Bank of England base rate, so as at today 8.25% down form 8.75% but the Court has the discretion to award interest at a rate that it believes is fair. Interest is calculated from the date the invoice becomes due until the date payment is made.

Can I claim the costs of collecting my debts?

Technically yes. Whilst the compensation is intended to cover the costs of debt collection, this isn’t always the case in practice. If a contract is signed after March 2013, the Late Payment of Commercial Debts Regulations 2013 are applicable and these allow companies to claim back any additional costs of recovering the debt, providing they are reasonable.

Utilising the Late Payment law

Although the law seesk to protect businesses from the damaging effects of late payments, some companies and organisations have been reluctant to use it in case they alienate a customer, but the late payer does not seem to have such qualms. In some instances, people assume that instigating reasonable requests top pay will harm commercial relationships.

However, late payment law can be used to recover debts without souring existing business arrangements. Many businesses that use the late payment law still maintain good relationships with their customers and continue to trade with them.

Debt Recovery : Why Our Free Letter Before Action Can Help You

 Being very British (where it takes 3 years to find the door to leave) we also seem to have a reticence about asking other businesses to pay on time after we deliver them goods and services. If only we could apply this logic to HMRC when they come knocking for our tax returns or we could extend our stay in an hotel gratis because we feel like it.

Put simply using the wording of our LBA which is free on https://www.avcdebtrecovery.com/business-debt-recovery-services/free-letter-before-action-for-business-debt-recovery/

 is an effective methodology and better than the three stage letter format that seems to be taught in credit control college.

Analysis has shown that a legally worded letter that mentions the potential of an outside collector is far more likely to bring you your monies than repeated letters. If that is allied to a telephone call you will increase your chances of recovery even further. At a minimum it will give you the gut feel of whether a late payer has the potential to become a bad debt.

 It has been stated SMEs are now waiting on average 64 days from the date the invoice is due before sending any letter that might be classed as a letter before action. This is due to the attempt to maintain business relationships and services. Why, do people get offended if you ask them to pay you what is agreed? We always ask if people would wait the same amount of time if their heating broke down?

By using the legal wording which we provide for Free, you will be saving a lot of time and money which could be used to further your business.

 Of course, if your actions and our Free letter wording fails then it pays to call in a professional company such as AVC Debt Recovery who offer no win non fee as standard.

Getting Your Monies : Business & Commercial Debt Recovery

Post Covid (not that it is yet post Covid)  every business will be feeling the pinch and some companies will seek to improve their cashflow by restricting your cashflow by paying you more slowly. As a business, it’s important that you get paid what you’re owed by your customers/clients. Late payments, and people trying to avoid paying for goods and services, can be costly to your business and have long-lasting and damaging repercussions.

Here are seven basic tips

1. Invoice as normal

The process for debt recovery should begin with you invoicing promptly and making sure your invoices are correctly issued. Payment terms should have been agreed before any sales or services are delivered so there are no ambiguities.

2. Chase

If it turns out that you haven’t been paid then you should have a process of chasing up the invoice. This could involve you sending additional emails or making phone calls to politely remind the client that they need to pay for the work you’ve completed for them, otherwise the situation will continue to escalate. Here we advise telephone as the first port of call, but a chasing process is a must and make sure you record what you chase and what is agreed from the chase.

3. Credit hold

Do not be afraid of this measure as this is a great prompt. Stop doing any work for them until they have paid their outstanding debt to you.

This is sometimes referred to as a credit hold or administrative hold, whereby work on an account stops due to a lack of funding.

In most cases, this is likely to solve the problem as a business might suffer without the services you are providing to them. However, if this doesn’t result in you receiving your payment then you do have other options.

4. Final notice

The final notice is the last piece of correspondence you’re likely to send the client, before legal proceedings begin. This highlights to them that they have until a certain deadline, which you can decide, to settle any debts with you, before you begin pursuing legal action against them to claim the money you’re owed.

If this final notice doesn’t see your client settle any outstanding payments with your business, then you have different options to pursue when considering legal action.

5. Legal action

Your last resort is to pursue legal action against your customer/client  if you seek to do it yourself whereby you would probably seek the services of the County court via small claims or if it is over £10,000 it goes into a different track; or

6. Debt Recovery

You can hire the experts such as AVC Debt Recovery who will not only seek to pursue your debt, but will give you the advice you require as 66% of County Court judgements never get satisfied (paid). As debt recovery professionals our track record of recovery is much higher.

7. Analysis

This nearly always overlooked once monies have been recovered.

1. Did our sales process have enough focus on who was going to pay me and when?
2. Was my credit checking process robust enough?
3. Did we set out my payment terms?
4. Did our terms and conditions stand up when tested?
5. Did our overall processes stand up to the test?

Learning from the processes above allows us not to repeat errors. Any business will be lucky to escape without a bad debt, but having issues then repeating them by only focusing on the sales element is not failing to plan it is planning to fail.

Advice on Payment Terms

Many SME’s do not realise that small changes to your payment terms could be an enabler for their businesses.

Many businesses use standard terms of business (some even cull other people’s Ts & Cs from the internet – really, we kid you not!) which may be missing the crucial clauses which could make it quicker, easier and more cost effective to recover your late payments.

Clauses that may be missing from your terms could entitle you to:

1. Recover your own credit control or administrative costs.
2. Recover the administration costs of pre-legal steps such as a Letter Before Action.
3. Recover legal costs in a Small Claims Track case from both individuals and businesses using your business services.
4. Seek an indemnity guarantee from directors of Ltd Companies.

As an example, inserting a Late Payment Clause could allow you to claim interest at 8% above base as well as a fixed sum of between £40 - £100 for every overdue invoice.

Visit our website www.cwcontractlawandlegal.co.uk for more information

Late Payment Law

The Late Payment of Commercial Debts (Interest) Act 1998 (and subsbsequent amendments) has two purposes. Firstly, to compensate creditors for the late payment of debts. Secondly, to deter late payment. It only applies to the commercial supply of goods and services where you don't have a provision for interest in your terms of business (if you haven’t got any why not?).

Simply: invoices that are not paid on time enables you to claim interest, compensation and (for orders placed after 16 March 2013) your reasonable costs of collecting the debt. Interest can be claimed at 8% over the Bank of England base rate together with statutory charges at a fixed rate of £40.00, £70.00 or £100.00 per invoice.

You can claim Late Payment Interest, Compensation and Costs if:

1. You have supplied goods and / or services

2. Your buyer bought for business purposes

3. The contract is not a consumer credit agreement

4. The contract does not contain a provision for interest

Both AVC Debt Recovery and CW Contract Law and Legal offer a free initial consultation on any debt or contractual payment issue over £600.00 and offer No Win No Fee as Standard on all business debts.

Get your FREE Letters Before Action (LBAs) with CW Contract Law and Legal and AVC Debt Recovery

Hi there

Research from the market leading debt recovery solictors has shown that correct use of an LBA has an 86% success rate in recovering debts with no further action required. Visit https://www.avcdebtrecovery.com/services-business-debt-recovery/free-letter-before-action-for-business-debt-recovery/f and download our template and take advantage of the only free lunch on the entire internet. Yes FREE.  

Take action and inform late payers that you mean business. It that does not work then we are the only debt recovery company that offers No Win No Fee as standard and a free contract law analysis.

Our deliverable and service will not only save you the time and hassle of chasing debtors, but we have a track record of getting your monies into your account. If we do not we do not charge you.

Please note that alongside our free LBA and tips on how to improve your credit control we are unique in that we offer  a terms and conditions service that is proven to reduce your exposure to bad debts and gives you an added tool in your bag. No such thing as a free lunch? Try it.

Late Payments Increasing

Small and Medium sized Businesses across the UK are advising that late payment has increased compared with a year ago.

This is growing concern due to a new business confidence monitor report that has been produced by the Independent Chartered Accountants of England and Wales (ICAEW).

Nearly a quarter of SME’s surveyed in the United Kingdom reported that late payments are becoming a bigger issue than they were a year ago.

Small Businesses in six out of the major nine industries report that the issue of late payment is growing compared with 2018.

A Continuing lack of assurance over the whole Brexit saga is affecting some businesses and industries, but it should never be an excuse to allow a late payment culture to flourish and grow. The ICAEW was quick to point out though that the Government’s announcement of increased spending combined with tax cuts cut a positive picture for the future.

Late payments for small business is nothing new is nothing new. The roller coaster of late payment for SME’s in the UK seems set to be up and down for the foreseeable future and business owners are well advised to be on their guard.

Many small business fail every year due to not looking at credit control or debt recovery action to attempt collection of unpaid invoices. SME owners are urged to be attentive against any excuse for late or non payment.

Following the latest report, the ICAEW has urged 10 Downing Street to recognise that the UK businesses are facing other problems, not just those posed by Brexit.

Michael Izza, ICAEW chief executive, said: “The Prime Minister has promised Brexit by 31 October and the overriding priority of his government must be to get a good deal. More than anything else that will give business the stability it is crying out for.”

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Late Payment Increase for SMEs

Whilst there seems to be a tendency to blame Brexit for everything late payments have nothing to do with this and are an area that has always existed.

Small and Medium sized Businesses across the UK are advising that late payment has increased compared with a year ago.

This is growing concern as  se t out in a new Business Confidence monitor report that has been produced by the Independent chartered Accountants of England and Wales (ICAEW).

Nearly a quarter of SME’s surveyed in the UKreported that late payments are becoming a bigger issue than they were a year ago.

Small Businesses in six out of the major nine industries report that the issue of late payment is growing compared with 2018.

A continuing lack of assurance over the whole Brexit saga is said to be affecting some business industries. The ICAEW was quick to point out though that the Government’s announcement of increased spending combined with tax cuts cut a positive picture for the future.

Small Business Late Payment is nothing new. The roller coaster of late payment for SME’s in the UK seems set to be on the rollercoaster and Business owners must continue to be on guard

 And their cash collection on point.

Many SMEs collapse every year due to not taking exhaustive debt recovery action to attempt collection of unpaid invoices.

Following the latest report, the ICAEW has begged 10 Downing Street to recognise that the UK businesses are facing other problems, not just those posed by Brexit.

Michael Izza, ICAEW chief executive, said: “The Prime Minister has promised Brexit by 31 October and the overriding priority of his government must be to get a good deal. Let us see if stability after Brexit arrives.”

Improve business cash flow and beat late payments with these 10 tips

Plans for growth can quickly be undermined if businesses can’t collect the money they’re owed. Australia’s small and medium sized businesses are owed $27.6 billion in late payments – affecting not only your firm but your SME clients ability to pay you.

The effects are real – almost half of business insolvencies in Australia due to inadequate cash flow.

So, with more companies being left out of pocket for longer periods, here are our 10 tips for prompt payment – for you and your clients.

1. Know who you’re dealing with

Before you even start a working relationship with a customer you’ll be invoicing regularly, weigh up how much of a risk they pose. Credit check unknown entities and ask peers or professional networks to discover whether they have a bad reputation for settling debts.

2. Consider the nature of your customer relationships

Is it possible you might arrange a retainer agreement with a client or become a permanent consultant to them? Such an arrangement guarantees regular income in exchange for being ‘on call’ or for providing an agreed amount of goods or services on a regular basis.

3. Charge upfront

Consider asking customers for a proportion of the total owed upfront in exchange for a discount. If they can make an ultimate saving by paying, say, 50% on day one, you may be surprised how many clients cooperate.

4. Revisit payment policies

Ensure payment terms are clear from the outset, written into any agreements and explicit on invoices. Also consider renegotiating payment terms, perhaps offering a discount for early settlement of bills

5. Make it easy for clients to pay

The easier you make it for customers to pay you, the quicker the funds will be in your account. Cloud-based software allows invoices to be issued automatically, followed up as soon as they’re overdue and easily reconciled by the recipient. Digital invoices typically include a ‘pay now’ button to enable customers to click straight through to settle up immediately.

6. Automate chasing payments

New technology offers several inexpensive and easy-to-use products to do the hard work. Credit control apps such as Chaser, Satago and Fluidly send reminders about payments automatically before payments are due and then chase outstanding invoices if bills remain unpaid.

7. Prevention is better than cure

Automate payments to make late payment a near impossibility. Using a ‘pull’ payment mechanism, such as Direct Debit via a provider like GoCardless, means that cash owed is collected from a customer’s bank account automatically. This works even if the sums involved vary from one bill to the next. Funds arrive quickly and reliably and failed payments almost never occur.

8. Have a back-up plan

If you’re left out of pocket, how will you cover day-to-day expenses? Research alternative sources of finance to plug gaps in your cash flow, such as extending the business’s overdraft, taking out affordable short-term loans or using invoice discounting or factoring.

Many firms don’t want to resort to these options, but having an emergency plan is sensible to avoid business disruption or, worse still, becoming a late payer yourself.

9. Focus on client relationships

While tech can do a lot to improve payment processes and make cash flow more reliable, don’t neglect the human aspects of business relationships. Cultivate the individuals who handle payments within companies you’re billing. If you have an existing link with the right person, any communication over payments is likely to be more smooth, swift and productive.

10. Deal with repeat offenders

Develop a strict approach to handling persistent late payers. If you don’t get paid on time, be wary about continuing to work with the debtor concerned. Also, think about adding late payment penalties to contracts to dissuade clients from leaving you waiting for money in the future.

Improve Your Credit Control

Remember at all times that cash is king, so avoid being a busy fool and improve your credit control.  It isn’t offensive to ask at point of sale who is going to pay you and have they got enough money to do so, but it is offensive to not get paid.

Too many companies give the wrong signals when it comes to asking the questions you should ask at point of sale.  if you are lax in following up with customers to check that your invoices have arrived safely and are on their ledgers, they may assume you are similarly relaxed when it comes to payment due dates.

Ensuring invoices are paid in a timely fashion can become an art for many credit controllers, in terms of striking the right balance between being proactive versus not wishing to agitate trusted customers.

 There are a few different ways in which you can help to avoid delays:

1. Send invoices by both email and post – this way it is more difficult for the client to make the argument that they did not receive it.
2. Ensure that details are clear and correct – a more straightforward invoice will be less likely to incur questions around why it was raised, which can also be used to slow down the payments process.
3. Include clear payment terms and conditions in the initial contract. The trusted email please find attached our terms and conditions, which can then easily be referred back to when required.
4. If you do take on a new client that you are unsure about, do not be afraid to request advanced payment so that this is made before products/services are supplied.

Ten ways to improve your chances of success when settling disputes

If your business is involved in a commercial dispute, you need to understand how to deal with the pressure and apply it on the other party when trying to reach a settlement. We say to everybody never think that the law is on your side any you will prevail and never take someone on as a matter of principle. Always follow the money.

Settling a dispute satisfactorily can save your business a lot of money, effort and anxiety. So, what is the key to getting a favourable outcome?

1. Know which terms apply

Whether written, oral or both, knowing which contract terms you're arguing over enables you to apply more pressure. If you're claiming that your standard contract terms apply, for example, and can show the other side agreed to them, you're in a much better position.

If a specific agreement was being negotiated but you started work before a final agreement was signed off, you're in a weaker position. If a contract is partly in writing and partly oral, what you said and did (custom)while performing the contract can count against you if there's a later dispute about what was agreed orally. If terms are ambiguous or unclear, the court will decide what a reasonable person would have thought you agreed - and that might not be what you think you agreed.

2. Keep adequate records

Maintain proper written record of negotiations leading up to the contract in dispute (send a simple email when you agree what is agreed), because the court will sometimes look at pre-contract negotiations to construe what the parties intended in the eventual contract. Parties without proper records will have a harder time arguing the accuracy of their version of events.

3. Don't make offers that later prejudice you

Negotiate in confidence. Know when making your settlement offer that 'without prejudice' means it can't be referred to in court to your possible detriment if negotiations break down. However, just adding the words 'without prejudice' is not enough: they must be attached to a genuine offer to resolve a dispute.

4. Deal with someone with the necessary authority

The other side may try to argue that the person with whom you negotiated lacked authority to make the contract (especially if they've since left) and this is a classic negotiating tool of the Japanese. However,  if their title implied they had authority or was put out to you as authorised to enact any agreement then you are on stronger ground..

5. Ensure proper handover of information

If the employee who negotiated the contract on your behalf is to leave, make sure there is a proper handover of information, with full notes and a debrief. Otherwise you'll find it hard to rebut allegations about what they said. Keep their emails filed sequentially. Ensure your personnel procedures show a clear defined audit trail.

6. Don't just ignore it

If you ignore or fail to take action in any dispute or don't rebut points raised by the other side, there is a chance a court may later see this an admission of being in the wrong.

7. Don't rush to court

The threat of court is always stronger than court itself. The court process is a blunt instrument and often death by a thousand procedures. There are alternatives, such as mediation, commercial dispute resolution or arbitration, which can lead to a quicker and cheaper settlement. If you're going to court, some types of dispute require specific protocols, for example, putting your case and providing information to the other side, which is designed to encourage settlement before it reaches court. Failure to do so means you risk being penalised in costs at any subsequent court hearing.

8. Don't dig in on your strict legal rights

Negotiating from a position of certainty about your legal position always sounds good, but English law is based on precedent and there is always another Judge who turns over the strongest position, so bear that in mind when you shout "see you in court," where often the only winners are the legal fraternity, who always get paid. Relying on your strict legal rights is akin to relying on politician to answer a question truthfully – it can leave you disappointed..

9. Learn to recognise tactics

For example, if you're taking someone to court they can tell basic lies which makes you madder and less flexible and stops you thinking clearly.

In any negotiation the other side is never a strong as you think they are and the law is pretty much the same.

Assess the strength of your case and assess your time and focus costs as any loss of focus on sales is a cost.

10. Get the wording of your settlement right

The courts are full of cases where the wording of settlements has left businesses out of pocket. For example, a payment in settlement of "all claims made" in a construction dispute didn't prevent a new claim being raised afterwards in relation to the same job – because the words "all claims made" don't cover future claims.

Late payments causing you a headache? Securing Payment could be easier than you think

For many businesses, maintaining the balance between timely payments and healthy customer relationships can often feel like a difficult task. But in 2018, speeding up the payments process can be much easier - and more straightforward - than you might think.

You can visit our website ww.avcdebtrecovery.com and download a free letter before action and tips. This often secures payment without the need for further action.

Many businesses do not realise that it is enshrined in law to claim interest and compensation to help ease your inconvenience. Under the Late Payment of Commercial Debts (Interest) Act 1998 and subsequent amendments, you can claim interest and receive fixed-sum compensation if payment isn’t received.

Compensation brackets are as follows: £40 for invoices up to £1,000; £70 for invoices between £1,000and £10,000 and £100 for invoices over £10,000

Many businesses have a perception that chasing late paying customers through a debt recovery agency could damage relationships with their customers but this is often fear for fear’s sake as our experience is that customers have no objection to paying what is rightfully due to our clients and the relationship between the two parties often continues with future trading – if you want to that is..

By failing to deal with late payments, businesses are suffering financial damage by not asserting their late payment law rights. Late payment doesn’t only affect your bottom line – it can also put your cashflow and day-to-day operations at risk and threaten your survival. It’s important to get what you’re owed without unnecessary delay, and taking a professional approach to this process is vital.

As specialists in debt recovery and negotiation we have found that communication from us (telephone, letter and email, we use the full range and don’t use the three stagte form letter approach adopted by many solicitors ) is far more effective in moving a late payer to action.

Reminder letters from businesses that are owed are often ignored especially when adopting the English reserve (“We are really sorry to contact you to ask for our monies” – “oh you are short of cash this this month” “So sorry to call” - Yes we have heard that call before) of asking for monies you are due. Solicitors like to state that calls from debt recovery agencies are not always welcome, but whilst the TV amd movie  persona  projected does legitimate one’s no favours (have you seen the latest incarnation money lender in Coronation Street?)  our involvement as part of your credit control process can be extremely useful. Thanks to the efficiency of the AVC Debt recovery business model, we inject impetus or as the French put it the élan of AVC Debt Recovery and our coast effectiveness adds value to your business.

Liquidation and Insolvency

Here at AVC Debt Recovery we use these phrases to people when we are asked to collect debts from Ltd companies. Simply put Liquidation and Insolvency amount to the same thing – the inability of a business to pay their debts – but it´s important to understand the differences between liquidation and insolvency. The levels of insolvency vary. For a company it is £750.00, for an individual or a sole trader it is £5,000.00.

Insolvency can be considered a financial “state of being”, when a company is unable to pay its debts or when it has more liabilities than assets on its balance sheet, this being legally referred to as “technical insolvency”. In a nutshell there are 2 forms of insolvency “cash insolvency” and “balance sheet insolvency”. To get our clients paid we see the former as the most dangerous.

Liquidation is the legal ending of a limited company. It will stop a company from doing business, or employing staff.

It is also possible to be technically solvent and unable to repay debt. This occurs when a company is “cash insolvent” and with assets that exceed its liabilities, but unable to source additional funds.

In these case a  liquidator can be appointed to administer the liquidation of the company’s assets and to distribute the proceeds to creditors, in accordance with the provisions of the Corporations Act.

A technically solvent business may also go into liquidation when their shareholders wish to realise the value of large accumulated reserves in a tax-efficient way.

In these cases the company is placed into Members’ Voluntary Liquidation (MVL) by a n insolvency practitioner and is  appointed as Official Liquidator.

The above differences between insolvency and liquidation show that simply being insolvent doesn’t necessarily provide enough grounds for a firm’s creditors to petition for a compulsory liquidation of a business, legally known as Court Liquidation, as in some cases the indebted may even be paid back.

To start a Court Liquidation process in the UK the value of the debt must exceed £750.00.

A creditor will serve a Statutory Demand (or Winding up  Notice or Petition ) on the company to pay a debt pursuant to section 459E of the Corporations Act. Failure to pay the money demanded means there is an “assumption at law” that the company is insolvent which will conduct an application to the Court to have the company wound up, i.e. liquidated.

In all above circumstances, the powers of the directors cease upon the appointment of a liquidator, who immediately takes full control of the business and investigates all actions taken by the directors while the company was trading.

While the approach to corporate governance is diverse from one country to another, in the main the duties and liabilities of European directors have a large degree of commonality so Brexit will not affect this.

Directors of limited companies may find themselves personally liable for the debts and obligations of their company under certain circumstances under the Companies Act 2006, but this is rare and the Registrar of Companies acts rarely. Company directors can also be struck off for periods of 7 years.  If a company director is  convicted of bribery, may also face imprisonment in addition to being disqualified from holding a director position for up to 15 years.

Here at AVC Debt Recovery and CW Contract Law and Legal we look at the insolvency of the company when collecting debts as our maxim is always follow the money, If you have any debts then our track record of success including the issue of Statutory Demands and Winding up Petitions is second to none.

How Do You Chase Unpaid Invoices?

Here are some FREE tips.

When all else fails call in the expert. Here at AVC Debt Recovery we offer no win no fee on business debt recovery as standard and have a track record of getting monies where other have failed.

When you’ve completed work that the client does not dispute, they should then pay for your services within a reasonable timeframe. That is the basic premise of the world of business continuing to operate.

However your payment terms come and go and suddenly its 3 weeks past your standard payment terms and you still haven’t received the payment. At this moment you may be worrying that a late payer will turn into a bad debt and you are spending your valuable time chasing monies that should be in your account.

Despite the introduction of the Prompt Payment Code in 2014, 23 percent of Britain’s small and medium-sized businesses are still pushed to the brink of insolvency as a result of late payments.

Here are some simple strategies you can employ to get payments in on time while maintaining good relationships with your clients.

1. It’s not rude to chase your invoices

Never be frightened to ask for payment for goods/services delivered and don’t feel you are being rude chasing an invoices is all part of the course. In the early days, it can feel rude to contact a client to ask for payment. It’s not you who are rude asking to be paid it is the client not abiding by the payment terms who is being rude.

2. Set sensible payment terms

Asking for immediate payment means you are chasing the monies before the invoice arrives. We always state using pre payment or 7 days as the minimum. Chasing invoices unnecessarily is a cost.

3. Set payment terms expectations at point of sale or order

No one likes to talk about money, but setting the client’s expectations by discussing your payment terms early on can prevent problems further down the line. Explain when you will invoice the client and what the payment terms will be. Most small companies tend to opt for a 30 day payment term, while larger companies might be happy with 45 or 60.

4. Inform your clients about late payment charges

Make sure you set this out in your Ts & Cs. Government legislation has been introduced that allows small businesses to charge up to 8 percent interesover the BOR base rate. The law allows you to pass any debt recovery costs onto the client, but only for business clients so ensure this is set out in your Ts & Cs if you are swerving domestic clients.

5. Don’t work yourself up unnecessarily

Make a polite telephone call as human error is to blame for most late payments and for larger companies it is often down to scheduling or processes. However remember that agreements trump processes despite what accounts payable try and tell you. Get a payment date form the telephone call.

6. Send them a Late Invoice Letter or Reminder and attach it to an Email.

Your initial payment reminder should be polite and written in the right way. Simply stating that the payment is now overdue is often enough to prompt payment. Something as simple as the following is fine:

Dear Sirs

Further to our telephone conversation we confirm that Invoice 1001 was due for payment on stated date). Your prompt payment would be much appreciated and for your reference we have  re-attached the invoice (and any PO.

Many thanks, Name

7. Send a statement of outstanding cost

If no payment is forthcoming and you do not receive a response from the client asking for an extension, you should then send another email. This time, explain that the invoice is now overdue and include a statement of the outstanding cost adding the Statutory Charge due under the law. The email should still be friendly and polite in its tone.

At this point, you might also want to think about whether this is a debt and its potential to become a bad debt. If you still have outstanding work for the client, you may wish to consider moving it back slightly (without transgressing any contractual obligations, although non-payment should always be a breach without remedy that cannot be used to apply set off of payment). Don’t be a busy fool continuing to work for someone who is not paying you.

8. Give them one last call to chase payment before action

Don’t give them a chance to ignore emails and letters. If you’ve followed the steps 1- 7 above advice above and still haven’t received the money, you need to perhaps ask the question: Is there’s an issue with the payment. It may be that the client is experiencing cash flow problems of their own and wants additional time to pay, so you need to assess the risk factors. Asking the right question should give you a clearer idea of their intentions, and help you decide what course of action to take next.

9. What if they still don’t pay the invoice?

If the client still doesn’t pay, then you need to continue to chase or call in the experts, although don’t let it consume your life or take too much time out of your working day, but make sure the client knows you are not willing to let it lie. If payment is promised, ask for the date it will be made by. You should also cease all work for the client until the invoice has been paid.

10. Should I consider legal action for unpaid invoices?

You may wish to go via the court system yourself, but a good debt recovery company will advise you of your chance sand will act robustly and free up your time. Of course you will have to pay them a percentage, but a large percentage of something is always infinitely better that 100% of nothing and the time and angst that the court process enacts on small traders.    

How can we help?

If you have clients who are paying late or you have a later payer who you think might become a bad debt call us now for an immediate free business debt recovery consultation.

The steps Small Businesses should take when chasing debt

(Small companies total 99.9% of all UK companies, some 4.8m. At the last count monies owed over terms was running at over £34bn.)

Agreeing what is agreed at point of  engagement usually precludes debts as does invoicing early and chasing payment. This should help keep cash flow healthy, but sometimes polite reminders aren’t enough and the money you’re owed does not appear.

Deciding if and when to take more serious action can be tough for any small business. The good news is that there are options for you and taking your customer to court is a last resort.

You could start a legal proceeding yourself or engage a reputable a debt recovery agency.

To make a claim yourself you can Google Money Claim Online and follow the procedures. Whilst this will mean that if you win you obtain judgement there is no guarantee that you will get you the money as 66% of County Court Judgements are never satisfied.

That is where a debt recovery agency comes into their own as they not only advise on your chances of winning and getting paid, but they increase your chances of getting paid after any judgement.

A good debt recovery agency will handle all correspondence and legal processes on your behalf, taking the burden from your shoulders and good one’s usually offer a “no win, no fee” a standard, but will of course expect to get paid so will take a commission of 155-20% so that means recovery of 80%-85% of your money as opposed to 0%. 

Another factor is that in almost cases you cannot obtain costs for any recovery of debts under £10,000 and winning a judgement may give you satisfaction on principle do not pay bills. In many cases a debt recovery agency can get payment where others cannot as good one’s will know the law, but are not charging solicitor’s fees. They will look at your legal cases, the status of the debtor and assess whether there is a collectable debt. If a no win no fee debt recovery agency will not take a debt on then it may not be a recoverable debt. The Late Payment of Commercial Debts (interest) Act 1998 and subsequent amendments allow interest to be added at 8% above base rate as well as allowing reasonable debt recovery fees to be added and this is an enabler to prompt many debtors into paying.

A good debt recovery agency will also give you the option of insolvency proceedings, but this is expensive and if it happens and a and a business is made bankrupt or wound up, other organisations may be owed money too and they will also be eligible for a share of the proceeds.

When the sale value of the assets doesn’t cover the debt, you will only get some of what you are owed. Where the company that owes you money has little or no assets, you might not get anything back, and you should take this and your legal fees into consideration when choosing if it’s worthwhile to proceed.

The rule of thumb for any small business is that you work hard so you should never feel bad about putting pressure on a customer to pay off their debts, and that a customer who has ignored your first phone calls and deadlines is likely to continue to do so unless something changes.

If somebody isn’t going to pay you, and you’re going to spend a disproportionate amount of time you should spend creating money and delivering your goods and services trying to get them to pay you, ask if theirs is the custom you want, regardless of whether you are desperate for business.

Being assertive from a contractual relationship in asking for monies you are owed is not being aggressive.  If you are selling then the buyer agreed to pay you then that is unequivocal and non-negotiable. If you are not being paid on time don’t let a late payer become a bad debt.

However, whatever you do if you decide to write you own legal letter don’t be tempted to make legal threats at the law on harassment is quite clear and don’t be tempted to forge a legal letter.

Payday lender Wonga was ordered to pay £2.6m in compensation to customers after it sent out fake legal letters.

A good debt recovery agency will never make idle threats against debtors and only ever set out the full force of the law of contract. Legal action is always the last resort when everything else has failed.

How to control potential bad debt as a small business

As a small business (which make up over 90% of all UK businesses) it’s safe to say one of the hardest challenges you will have to face is making sure you have cash to run your business. Here are a few tips to you to help you with your finances.

Don’t be afraid of debt

Debt is a scary concept, but keeping debt under control is a crucial aspect of any business. It’s as import as making the sale, if not more important from the moment you make the sale. So plan ahead and look at all aspects of the cost of making the sale including credit checks.

Don’t ignore your outstanding invoices

If you don’t keep an  eye of the monies owed ledger at the expense of selling and other issues then. The key is control -  being aware and taking action.

Regularly revisit your invoices outstanding column

Once you have set your payment terms keep simple spreadsheet  tables showing days overdue and if it starts to creep up ask yourself why. Make sure whoever is doing the invoicing is also happy to do the chasing as some people are not multi taskers when it comes to chasing money and are happy to accept that the decision maker on paying is not in the office.. As your business evolves the income and outgoings will too, so keep on top of your budget.

Seek advice on debt recovery

It’s never a bad idea to talk to a professional company such as AVC Debt Recovery who can help you recover monies quickly and efficiently . If you are unsure contact a professional.

Controlling your monies owed ledger is the most crucial aspect of your business after making a sale and once you have made one it becomes the most crucial. What is important is understanding what works for you, but to make sure you are consciously and vigilantly making your debt control a priority. Remember, domn’t leta later payer become a bad debt

Prevent Late Payments Going Forward

Take these simple steps to improve your chances ensure timely payments in 2019.

1. Issue professional looking invoices: 

Use invoice templates to create consistent templates that look professional. Keep them streamlined so key information (amount, due date, where to send payment, etc.) stands out.

2. Issue accurate invoices: 

Make sure your invoices are complete and correct. Double-check things like PO numbers or references agreed and especially who the invoice should be sent to and the address. Don’t let an over eager salesperson overlook this. Many invoice payment delays are due to honest mistakes.

3. Send timely invoices: 

Try invoicing as soon as the work is completed or product delivered. Unless you have a different agreement with the client (such as sending one monthly invoice), this is a good way to get paid faster.

4. Don’t issue immediate payment terms

Unless you are getting pre payment then immediate often adds costs to the collection process as effectively you need to start chasing before the invoice is processed, so incorporate a reasonable payment retime such as 7 days.

5. Set out for late payment penalties in your Ts & Cs

Reference the Late Payment legislation in your Ts & Cs and be prepared to enforce the provisions of the Late payment Act(s). If you haven’t got a set of Ts & Cs.

Reasons Why an Invoice is not Paid On Time

A lot of businesses find themselves wondering why their invoices are not being paid on time. With the doomsday scenario of Brexit being thrown at us every day some companies do not need another excuse not to pay you late. S some business will go through tough phases in their financial year which could lead to invoices not being paid. However, there are usually an underlying reasons as to why they do not pay you on time.

1. You do not have a process at point of agreeing the order for invoicing

A lot of people good at selling forget this. Payment should be set out in your terms and conditions and if you are one of those companies that do not have terms and conditions then set it out in an email or letter. Here in England we seem embarrassed mentioning sex or payment terms but do not let English reserve (as set out by John le Carre in Tinker Tailor Soldier Spy) stop you being clear about what is required for payment and when.

2. Your Business practices are passive

A lot of businesses are very laid back when waiting to receive payment on their invoices which a lot of debtors take advantage of. If your business has a laissez-faire pay me later approach, this gives the debtor an opportunity to leave your business as its least priority when it comes to payment. Make sure your business practices align with your agreement set out in Pint 1. Never be frightened to remind someone that an Englishman’s word is his bond and as such  payment is due and you expect invoices to be paid on time.

3. They are not satisfied with the Product/Service

One of the primary reasons for debtors to pay late is the dissatisfaction of the service/product they have received. In addition there could  have been complications to the service or product which lead to an unwilling debtor. For example in some areas such as construction or service industry there can be interpretation of the status of the deliverable. Again Ts & Cs with a properly set out disputes procedure will help to ameliorate this. Having processes also helps to ensure satisfied customers.

4. The business you supplied have Cash flow issues

One of the common reasons for late payments is an occurring issue of cash flow from businesses. It is important to communicate effectively with customers to find the reasons as to why they are struggling with cash flow issues and perhaps offer a payment plan as a gesture of goodwill, notwithstanding that establishing best practices at point of sale often precludes the company citing cash flow as your issue.

5. Your Business doesn't know the Late Payment Law

Under the Late Payment of Commercial Debts (Interest) Act 1998 and subsequent amendments, companies can claim interest and also receive fixed sum compensation if a payment is not received or if a payment is late. Although the law is there to protect businesses from the damaging effects of late payments, some companies (especially small traders) seem reluctant to us it. In some instances, people assume that instigating debt recovery or hiring a debt recovery company will harm commercial relationships. 

What advantages does a bespoke letter from AVC Debt Recovery have over other standard debt collection letters?

Collecting monies you are owed (debts) can prove to be a tricky task. Many people we speak to voice concerns about the difficulties of chasing a debt, without chasing away their clients. Debt collection practices have come under the spotlight in recent years, with many people expressing a negative opinion towards unorthodox debt recovery methods. A debt recovery letter from us allied to our proactive use of the telephone may be more beneficial to you than a standard from letter from a debt collection agency.

It is all about the detail of your business that we include that differentiates us.

An AVC Debt Recovery letter comes with a lot of benefits. One of the main ones is that we have asked you for the information that is required to ensure the specifics are in the letter and we can align it with the regulations and potential pitfalls when chasing a debt. We want you to retain the client, but we are tasked by you with being assertive to get your monies into your account.

The law on late payment is quite clear and there for a reason, so nobody should be frightened to set that out to a non-paying client, with clear concise non emotive language. A letter from AVC Debt Recovery can be just as quick and cost effective as more traditional debt collection methods, but will additionally provide a more formal and sincere way of requesting payment before legal action is escalated.

We provide you more options

UK’s late payment culture shows signs of improvement

The time it takes to pay suppliers across the UK has improved by 14 per cent, with payments taking on average 42 days in 2018 compared to 49 days in 2016. The data compiled by Tungsten Network, a global e-invoicing provider, shows that the time from invoice submission on its network to payment has steadily improved since 2016, coinciding with the UK Government requiring larger businesses to start reporting their payment practices in April 2017.

Figures also show the UK is performing much better than the rest of the Europe with payments being made in 42 days on average versus 52 days on the continent but lags one day behind the US. In producing the data, Tungsten Network has analysed more than 19 million global transactions involving 100,000 businesses that have passed through its e-invoicing platform since 1^st January 2016.

Of the transactions analysed, 19.4% of the 1.69m payments made to UK suppliers have been from FTSE 100 companies, which take on average 42 days to pay UK suppliers, the same as the current overall average for the UK.

Prompt payment is crucial to all businesses large or small, so it’s encouraging to see from data that the UK payments culture has seen some improvement over the past two years. Nevertheless, instances such as the collapse of Carillion indicate that late payments to suppliers continue to be rife in certain sectors of the UK economy.

“The decision by the government to push for greater transparency of payment practices among larger businesses shows positive intent. It will be interesting to see whether the government’s proposal, encouraging large businesses to appoint a board member to be responsible for making sure invoices are paid on time, has any impact on the payments culture across the UK.

An Issue not to Ignore when You are in Business

When you are in the early days of starting up your business, there’s a never-ending list of tasks to complete. Sorting out the terms and conditions of trade is not at the top of people’s list although it should be. Getting your product market ready, finding customers and marketing your product take priority in the start-up process.

Neglecting this less glamorous part of your business, however, could impact your cash flow through delayed payments and having to pay for materials before taking payments.

In a worst-case scenario, you could end up spending lots of money waste your valuable time on debt collections then realise the late payer is a bad debt. . A bespoke set of Ts & Cs from CW Contract Law and Legal will cost you around £220.00, so why take the risk.

Late payment is a fact of life for small businesses, as customers often give lower priority to bills from small firms. With the right terms in place, however, you can ensure that you get paid first. Get your terms right and there’s no excuse for slow payments.

Protect your business

If you don’t specify terms and conditions you put yourself at risk of uncertainty, misunderstandings and the word ambiguity! It is crucial to establish the actual arrangement between the two parties involved in any deal. You need to cover yourself, so clients or partners have no opportunity to go back on their word (some will anyway, so reduce your risk at point of agreement of sale).

If there is nothing in writing there is no proof. If the terms are in writing, it is evidence you can produce if you need to.”

In a nutshell terms and conditions protects you as a business and have an important role to play, so much so that there are huge numbers of precedents about terms and conditions within contract law. They define all matters and the duties, rights, roles and responsibilities of the parties involved in any agreement or contract.

What to include

Look upon simple well drafted  Tso & Cs akin to Channel 4 bake off.. A recipe for a good cake without a soggy bottom – a recipe for doing business and having absolute clarity on your business agreement and the way you wish to do business. They should set out what the agreed terms are between parties and more importantly what happens if things go wrong or one party wants to leave or is unable to continue. Terms and conditions can also save a lot of money by addressing all the facets you want included at the outset. This in turn avoids disputes later on about what might or might not have been agreed.

The exact elements to include depends on the individual business but you should consider including:

a.         A clear definition of what products or services will be provided

b.         Setting out the payment terms – when is payment due

c.         Any guarantees or warranties offered

d.         Timelines for delivery and any queries

e.         Specifying what happens if either party doesn’t deliver or pay or wants to end the relationship

f.          The term of the agreement and what notice is required to get out of it

g.         Which law shall govern the contract

Some things must be included on the invoice. There is a legal requirement for invoices to set out the business name and address as a minimum. Additionally, if they are a limited company they must set out the company name; the company number; where it is registered; the registered office address, which may be different to your actual trading or correspondence address. If you want all the names of the directors include, but  all the names of the directors — not just some of them. If the business is registered for VAT, it must state the VAT number.

There is no legal requirement to include terms and conditions on invoices though many people put their terms on the back of them. However, if you send your invoice 30 days after delivery and the other party has sent over their terms their s will prevail so we say send over your Ts & Cs at point of agreement.

When things aren’t clear

Failing to specify terms could have a serious impact on your cash flow. You may end up in a situation where the customer thinks they will pay at the end of the project and you think you are being paid at the beginning or in stages, so you could end up having to pay for materials and staff before you have received the money from the customer.

“Equally, if you do not specify so in your terms, you may have no right to charge interest for late payment, so again you will be out of pocket if a customer pays late.”

One size doesn’t fit all

It is crucial to make sure your terms are specifically written for your business – you can’t assume another business will have the same needs as yours. Some people take flyer and cull someone else’s of the internet. Whilst there is a lot to do when starting a business it pays to get your Ts & Cs right at the start and update them as you grow. 

When you are in the early days of starting up your business, there’s a never-ending list of tasks to complete. Sorting out the terms and conditions of trade is not at the top of people’s list although it should be. Getting your product market ready, finding customers and marketing your product take priority in the start-up process.

Neglecting this less glamorous part of your business, however, could impact your cash flow through delayed payments and having to pay for materials before taking payments.

In a worst-case scenario, you could end up spending lots of money waste your valuable time on debt collections then realise the late payer is a bad debt. . A bespoke set of Ts & Cs from CW Contract Law and Legal will cost you around £220.00, so why take the risk.

Late payment is a fact of life for small businesses, as customers often give lower priority to bills from small firms. With the right terms in place, however, you can ensure that you get paid first. Get your terms right and there’s no excuse for slow payments.

Four Good reasons to outsourcing debt recovery

Many businesses wonder why they should outsource their debts. Why should they pass or leave their debts to an external source instead of dealing with it themselves? Collecting debt and effective credit control sounds simple, but when looked at closely it really is not. There are a lot of reasons to why companies can’t deal with recovering debts and we are in place to offer you a solution.

We have reasons to believe that companies should outsource their debts to us. Here are 4 reasons.  Our solutions offer businesses a logical way of dealing with debt recovery. Here is how

1.It Minimises costs

Every company has a budget but our budget is that we are so confident of our ability to collect debts that we offer no win no fee as standard. Also within our small team here we have people who know numbers and run businesses so we understand fixed and variable costs. We also say that recovering 80-85% of something is always better than 100% of nothing. We offer a free LBA and as part of our service we will offer advice to those who want to go it alone. Since started trading many clients have used our free LBA effectively

2.  It Saves Time

All the best companies are created by those who can sell. Selling and creating is a skill. In the same way you would not ask Harry Kane to play in goal we ask why those who develop their companies by being sales and creative focused seek to do their debt recovery. We have the resources that enable you to do what you do best. At AVC Debt recovery we are able to communicate with debtors locally and internationally whilst using the correct procedures in recovering the debt owed. We work diligently in recovering your debts without any hassle for you.

3. Reduce your stress

Debt recovery is frustrating and stressful for businesses and interrupts a lot of plans in all types of businesses especially SMEs. We have worked with many businesses from different sectors which gives us the expertise in recovering debt for all our clients. We take the weight and pressure off to enable them  to move forward and achieve their goals.

4; See the results

By outsourcing your debt to us, you will find that your business will become more proactive knowing that this important facet is taken care of. We offer fixed credit control packages or the best value debt recovery in the business. Try getting no win no fee in SEO or marketing. By choosing to be our client you will also find that you will have more time to dedicate to other aspects of your roles in your market and your productivity will flourish. 

UK Business Debt Rises by a Quarter

The total value of UK business judgments rose sharply - by 25% - during the first quarter of the year, according to figures released today by TrustOnline.

Over the same period, the number of online searches by people checking judgment status grew by 7%, compared to Q1 2017, to just under 75,000 searches. 

TrustOnline is the only online source for UK judgment information about other people and businesses.

During Q1 2018, just over 33,000 business judgments were registered in the UK, 8% more than the total issued in Q1 2017. The average value of a business judgment also increased, rising by 16%.

As a result of these changes, the total value of UK business judgments in the county courts sharply rose by a quarter compared to the first quarter of 2017.

These statistics cover county court judgments registered in England and Wales; simple procedure, ordinary cause and small claims decrees registered in Scotland; and default and small claims decrees from Northern Ireland. 

Malcolm Hurlston CBE for Trust Online said, “Judgments against businesses clearly show failure in financial management. This quarter's increase is a warning sign and it would be good to see an equivalent rise in searches.”

During Q1 2018, TrustOnline handled 74,649 online searches from the public for judgments in the UK; many more are expected in 2018 with more judgments to search and a mobile friendly version ready for launch. A search of all UK registers costs £10; a search within one of the following three jurisdictions: England and Wales; Scotland; or Northern Ireland, which is likely to be enough in many circumstances, costs £6.

Statistics

Judgments against businesses Q1 2018 (compared with Q1 2017)

• Total number: 33,010 (up 8%)
• Total value: £105.1m (up 25%)
• Average value: £3,183 (up 16%)

This article was originally published as a BLOG by Yuill & Kyle, Glasgow. 05 June 2018  Written by macroberts 

Invoicing Get It Right and it Pays Dividends

As a business owner, invoicing may seem like a tedious, straight forward task that doesn’t require your full attention. But, it’s absolutely crucial if you want your business to maintain a positive cash flow.

To ensure that you get compensated for your goods or services on time, you need to prevent these mistakes. Here are some points to help you.

1. Forgetting to invoice.

Obvious? Sure. But invoicing can sometimes slip the minds of business because they’re so busy making the next sale opr the next cost saving initiative. There are even some circumstances where a business owner doesn’t send out a bill.

Remember, it’s your responsibility to send out an invoice. Make invoicing a priority so that you don’t forget. A good salesperson always talks about invoicing at point of sale

2. Procrastinating.

The best time to send out an invoice is immediately following the completion of a project or a sale. Unless you have another financial arrangement with your clients or customers, you can’t afford to wait to send out an invoice.

Those who invoice the same day that the job is completed (as opposed to waiting two-plus weeks for your billing cycle) are almost 1.5 times more likely to get paid.

3. Not following up on unpaid invoices.

Even if you’ve made invoicing a priority and send them out immediately or frequently, there will be times when the client misses the due date because they misplaced the invoice, simply forgot about it, or are just not good payers.

As in the sending of invoices it is your responsibility to follow-up on unpaid invoices. Contact the client immediately to find out what’s going on and use invoicing software that send out automated reminders.

If the client is unresponsive, you may have to take steps like sending an LBA or appointing a debt recovery agency.

4. Having unclear terms

Avoid using ambiguous language when writing out an invoice. If you want the client to pay the invoice quickly, make sure that you include clearly stated item descriptions, prices and quantities.

If your clients also need to clearly understand when the payment is due by use immediate, or 7 days, although we found that those who put immediate on their invoices get paid slower than those who put 7 days and also spend less time chasing as an invoice that is later when it arrives causes confusion.

5. Not agreeing what is agreed and setting out the terms.

Here’s some killer words of wisdom from Sir Richard Branson, “In an ideal world, a handshake would be all that an entrepreneur or executive needs to seal a deal with a business partner.” However, since it’s not uncommon for business conditions to change, because of the economy or consumer tastes, it’s in your best interests to have agreements to protect you and your business.

Using simple Ts & Cs or signing simple contract ensures that both parties are protected and are on the same page when it comes to payments. As Branson notes, “By all means, shake hands on a deal, but then make sure to ask your lawyers to record the details. It could be the best bill you ever pay!” For those who haven’t got as bigger pockets as Mr Branson recourse to simple legals’ is just as good.

6. Sending invoices to the wrong person or department.

Just because you agreed on a project, sale, and payment terms with an individual doesn’t mean that they’re going to be the ones responsible for paying the invoice.

After all, they could have an entirely different department or have hired an outside party to handle billing. Even worse? Billing the wrong client altogether. .

Prior to sending out an invoice always make sure that you’re sending it to the right person or individual so that you can bill them directly. Betetr still get this information at point of sale

7. Incorrect or missing details.

In order to prevent any misunderstandings, your invoice should always include the following information:

Always make sure to include the following details on any invoice you send out:

•           Legal company name and number

•           Office address

•           The client’s name and address

•           Invoice number

•           Invoice date

•           Due date

•           Any tax numbers that may be required by local law

•           Payment terms

•           Itemised list of products or services that you provided

8. Failing to itemise.

Every one of your invoices should include an explanation of each charge, such as hourly rate, expenses, or the flat fee for a project.

How you itemise your invoices will vary depending on your business, but it’s an essential component of invoicing if you want to get paid on time since it will let your clients know exactly what they’re paying for.

9. Not using a numbering system.

A numbering system makes it easier to track and manage your invoices bills, like which invoices have paid and which ones are still pending, and prevents you from sending duplicates.

Additionally, a numbering system, makes it easier to locate a bill if you ever have the unfortunate event of getting audited.

10. Unexplained fees.

Not all  surprises are pleasant. In fact, one of the worst invoicing mistakes that you could make is sending a client an invoice that contains undiscussed or additional fees. This could lead to confusion or even distrust.

Explain each and every charge to your clients prior to starting a project so that they aren’t surprised when they review the invoice.

11. Late Payment Fees.

Late interest fees especially The Late Payment legislation should be set out on your Ts & Cs.

12. Incentives.

Think about incentives to encourage customers to pay the invoice on time or, even better, ahead of schedule.

This can be done by offering them a discount if they pay the bill before it’s due. Other incentives could be gift cards or credits or if they pay early.

13. Poor formatting or editing.

Spelling errors, incorrect  fiscal amounts, and generic formatting can make your business look sloppy and unprofessional.

Always double check your invoices so that you can catch mistakes before the invoice is sent out.

14. Offering multiple payment options.

Make it as easy as possible for your clients and customers to pay you. Consider using a variety of payment options from credit card processing, to direct bank deposits and checques. Cryptocurrencies are coming. Thank about it.  Make sure everything is safe, fast, and efficient for both you and your customers.

15. Branding Invoices.

It has bene stated that you are 3x more likely to get paid if you add a company logo to your invoice? That’s because a logo establishes your company as a professional and established brand and differentiates you from the other invoices that your client’s are receiving. It also serves as a good branding opportunity.

Make sure your invoice mirrors anyyour brand or any branding

16. Invoice as marketing tool.

While the main goal of your invoices is to get paid, never lose the chance to sell. Invoices can also be used as a marketing tool that can increase your revenue.

Perhaps include marketing materials, such as flyers or email newsletters. Discounts for future work or products and referral incentives work well.

Asking for testimonials or recommendations or showing a short testimonial on the invoice is good advertising.

17. Politeness.

Being polite, like adding phrases like “please pay your invoice within 21 days” or “thank you for your business,” can increase the percentage of your invoices getting paid.

In addition being polite can also improve your brand’s image and good manners cost nothing.

18. Keep your payment terms short.

If you give customers too much time to make a payment, then it’s obviously going to take longer for you to get the money into your account.

It’s the norm to have a payment term of 30 days or less, however, make sure that you review your industry’s invoice standards, along with asking the client when their pay cycle runs, in order to establish your payment terms.

19. Not knowing your client’s pay cycle.

Your clients have set their own payment procedures. For example, they may pay their bills only on the first of every month, which means that even if you send them weekly invoices they won’t be paying those invoices until the first.

Ask your customers when their pay cycle is at point of sale to enable cash flow management better.

20. Warranties or Guarantees.

If you do offer a guarantee or warranty, make sure that is clearly mentioned in your terms and conditions. Nothing stops an invoice quicker than a dispute on a warranty or a guarantee.

21. Invoice factoring.

Are you in need of cash fast? Then invoice factoring where you sell unpaid invoices to an invoice factoring company in exchange for cash may be for you.

In most cases, you’ll receive 80 percent of the invoice amount immediately and 20 percent (minus fees) when the invoice is paid-in-full.

While this can be a life-saving option when you’re cash strapped, many businesses fail to fully understand invoice factoring.

Before going this route, make sure that you’re aware of the fees that you’ll have to pay, not meeting the minimum requirements, submitting a bad application, and trying to submit invoices from habitually late paying clients.

22. Using a system that works for you.

… not one that works for someone else. Simple and effective. It is no use buying the latest technology if you struggle to use it. We say KISS everything and always use Ts & Cs.

5 Points To Consider When Recovering Debt

Recovering debts is never easy. Even for big corporations with legal departments or access to legal firms. We are a legal services company who specialise in debt recovery with no win no fee being our standard offer.  Here are 5 points you should consider when recovering your debt.

1. Information is Key

Keeping clear concise records on invoices and invoicing as well as information on the debtor and how much is owed is crucial to effective debt recovery. Good record keeping enables you to track how long payment hasn't been made and adjust interest attributed from late invoices.  Having information on who makes payments also puts you in the best position in terms of reaching out to them and coming to an agreement before taking further action. Good information puts you in a strong position if the debtor decides to dispute your case. Some debts are not collectable because of the lack of information.

2. How will recovery services integrate with my company?

Align you credit control cash collection with the deliverables of your business.  Make sure everybody from the salesperson to the customer service understands the phrase who will be paying us and when will we get paid.

3. Assess Your Options

 When looking to recover a debt you need to access what the right steps are to recovering the debt efficiently. You may need to ask yourself:  is the debt owed by an individual or a business? Are the debtors fully aware of your terms and conditions? Have you contacted the debtor to seek an arrangement to preserve the trading relationship?

• Are you intending to chase the debt first before engaging a debt recovery specialist?
• What is my time trade off to chase debts against selling and doing what I do best?
• Is the debt disputed?
• Is the debtor solvent?

These are one of many questions a good debt recovery agency asks.

4. Use The Law on Late Payment

The Late Payment of Commercial Debts (Interest) Act 1998 helps, but also makes sure you have a set of terms and conditions then enables you to charge interest and levy charges to recover debts.

5. Consider Outsourcing to Specialist debt collection firms

Outsourcing your debt recovery can help reduce your costs as you will stop spending money on overheads such as employing extra staff to chase payment. When you use a debt collection agency there is a higher success rate of recovering money. Customers are more likely to pay if they receive a letter and a call from someone they know means business.

When a payment becomes overdue, it's important that you act quickly to collect. The longer it takes for a debt to be recovered, the more difficult the process of recovering becomes. We always say: Don’t let a late payer become a bad debt.

Business Debt Recovery Outside of England

Even in Today’s Brexit world we operate in a globalised business world, more so now the UK seeks to trade with the whole world no just the EU.

Laws travel across borders as often as business does, so it is important that you consider the impact of paperwork, local laws and possible legislative changes when doing business abroad. 

The first point when you agree what you agree is to make sure that ways of working set out in any contractual terms are clear, understood by all parties and nothing suffers a lost in translation moment. As always the dispute resolution aspect is crucial to cover what happens if there is a dispute, non-payment or a claim against your business.

Which Court in which country will have jurisdiction over the dispute and which law applies to any dispute that arises. The simple rule of thumb we tell our clients is use English law and set the term of jurisdiction seat as London.  Start with the maxim used by Julius Caesar (if you want peace prepare for war) that if you want contractual peace (of mind) look to ameliorate any chance of conflict (war).

Looking where problems might arise before they start precludes 9-0% of contractual disputes.

Based upon the start point that it is better to apply English Law and jurisdiction, the best way to ensure that English Law applies and the Courts of England and Wales have exclusive jurisdiction to deal with any dispute or claim arising is to specify exactly that in the contract which is signed by duly authorised representatives of both parties.

Sometimes it is best to obtain a written agreement with a translation signed by both parties. Signatures should be by persons with authority to bind both businesses to an agreement. If you do this remember to set out the precedence of the English language version.

Ideally an original document properly executed as opposed to an exchange of emails Any contract that is dependent upon email exchanges often leads to  arguments over jurisdiction. If, within the contract, a claim is made and set out as a debt and the Debtor resides outside the UK it is not always straight forward to issue proceedings in England and Wales, as  it is always necessary to seek the Court’s permission to start proceedings here. Once you have a judgement here in England then enforcement can be enacted elsewhere. 

Businesses may have a clear understanding of debt recovery legislation in the UK and collecting a debt from abroad doesn’t have to be a tricky issue. The starting point always due diligence and advancing credit to anybody is a dilemma, but to foreign companies seven more so. The approach to credit control should be no different between dealing with a customer in the UK or abroad. In all cases it is vital to know your customer, who are you dealing with and what is their financial worth having taken the appropriate credit checks. 

The same question should always be asked, who is going to pay me, when and how.

Also, remember that whilst UK has left the EU, EU law still applies to your Debtor and can bestow upon them privileges under EU law which you must navigate. For example Germany has strict privacy laws which can prevent tracing. In the UK it can take a significant period of time to obtain a judgement if a matter becomes defended and the claim is in excess of the small claims limit it can eighteen months to two years to bring a case to trial. With the court delays occasioned by Corona Virus there are significant delays to most cases in the UK at present and we would expect this also to be the position throughout Europe and Worldwide. Choice of jurisdiction and researching which jurisdiction is best suited to the particular product or services supplied is an important consideration.  If you are struggling to find the best approach make sure you contract has a found waterfall disputes resolution process that goes sort it out amongst your selves, mediation then binding arbitration as whatever jurisdiction you choose only a fool seeks to sit in front of a judge and they are not cleverer here in the UK than anywhere else.

When working with overseas businesses, it is important to stay aware of warning signs of an inability or unwillingness to pay invoices and take effective action accordingly. Taking “action” early is important and having established procedures in place to do, but whatever you do debt recovery anywhere is not an exact science and any enforcement for a company domiciled outside the UK is not cheap.

Here at AVC Debt Recovery we have collected debts across many countries including but not limited to: Spain, France, Germany, Holland Philippines and Hong Kong.

The key to collecting debts is always prevention is better than cure, so due diligence, adherence to contracts that include English law and replying on your get feeling will solve most problems.

For everything else there is AVC Debt Recovery and CW Contract Law and Legal

Invoice Fraud causes loss of £9bn to SME’s

A new report released has revealed details of a whopping £9bn lost to scammers as a result of fraudulent invoicing and scam debt recovery.

The report, compiled by Tungsten Invoicing Network, was conducted with over 1,000 companies contributing to the findings. A massive 47% of companies stated they had been contacted with ‘fake’ invoices for payment with 54% of companies questioned  citing business fraud as the biggest threat to them.

If this is extrapolated out to the total list of SME’s in the UK that is a staggering amount of fraud.

Rather surprisingly, only 44% of businesses said they would contact the Police or Action Fraud if they received a dodgy invoice whilst 13% admitted they would not know how to deal with the situation.

Typical invoice fraud methods used by con artists and scammers include fake invoices, email phishing viruses hidden in attachments, false changes to bank details and duplicated invoices.

It is estimated that 43% of all cyber attacks are aimed at small to medium sized businesses who are often so focused on their business that they may not be alive to the tactics of the fraudsters..

Head of Action fraud Pauline Smith said “It is important that employees are made aware of invoice scams and are ready to recognise the signs of fraud. Incidents of invoice fraud are underreported and therefore it is difficult to know the true scale of this fraud type”

She continued “However, what we do know is that this type of fraud prevails across all types of business and no one type of industry is immune”

Anybody experiencing or receiving dodgy emails with requests for payment are urged to visit the website of Action Fraud  for advice and assistance.

Authorities issue warning of Business Debt Collection scam

Action Fraud warn of new Debt Collection scam

Cyber Police Action Fraud have warned Small Businesses and sole traders to be on guard against a new Debt Collection scam in which financial fraudsters claim to be recovering debts on behalf of legitimate bailiff firms.

The audacious scammers call companies claiming that fees have not been paid for bogus advertising subscriptions or directory insertions. The plausible fraudsters then claim to be bailiffs and Enforcement Agents acting on behalf of acting Debt Collection Agencies.They then proceed to advise that there is a unpaid County Court Judgement and quote the amount and state they will be enforcing it by way of removal of goods and suchlike.Such is the audacity of the criminal fraudsters, they have even been using the actual real names of authorised Bailiffs and Enforcement Agents.

The fake Debt Collectors then demand sums are paid via bank transfer. If the victim refuses, the fraudsters then threaten to visit their premises and even their homes to secure payment of the purported debt.This should alert most people as the law is quite clear about the issue of paperwork.

Action Fraud, the UK’s Anti-Fraud and Cyber Crime reporting Agency advised there have been 52 reports so far pertaining to this debt collecting fraud with a range of different businesses and individuals targeted so far. The advice AVC Debt Recovery give is that if anybody receives any unexpected and suspicious calls they should ask for return contact details then contact Action Fraud immediately if they are not able to verify the authenticity of the callers claims.

6 Questions to Ask When a Customer Says They Didn't Receive an Invoice

As a credit controller in your company or a small business chasing payments, you probably have more than enough tales to tell about debt recovery. Even so, there might be a new situation and you may be presented with excuses as to why an invoice has not been paid on time.

One common statement is that the customer never received your invoice after you sent it out on paper or in e-invoice form. While it's true matters could occur where an invoice goes missing, some customers might use this as a way to avoid paying a bill on your due date.

Despite the time cost of collecting these late-payments, and it may have to involve lengthy phone calls it is worth the time effort, because you have a way to determine whether there's truth involved or not.

We find that a definitive methodology and checklist gets better results.

1. Where Should Invoices Normally Be Posted?

If the customer thinks you lost the invoice, you need to ask them which address you should send your invoices to on a regular basis. Maybe they have another address they prefer if they don't check their email or letter box often.

By asking this question, you'll know you sent your invoice to the right place rather than having the tables turned.

2. Have You Changed Addresses Recently?

It’s a simple one, but this often happens. Ask them when they moved and what their new address is. Be sure to remind them that they need to contact you if they move again so there isn't any future misunderstanding.

3. Who Should You Send the Invoice To?

Invoices and paperwork can get lost within a company. Having the name of the person in accounts payable ensures your invoices gets to the member of staff able to authorise payment straight away.

4. Is There Any Other Issue?

The customer may tell you they don't have a copy of your invoice and that they couldn't pay it until they receive one. You'll want to ask them if this was the only reason they haven't paid right away. If they say yes, then it's time to send them a copy immediately with a promise from them they'll pay.

Asking this question gives you a good way to receive your money once you send them a new copy of the invoice. It makes it tougher for them to come up with other excuses for not making a timely payment.

5. Can You Pay The Invoice Immediately After Receiving It?

This is the same as asking who is going to pay the bill at point of sale.  You need to ask the customer whether they can pay the bill as soon as you send them a new copy. By holding them to this promise, you'll place it on record that they committed to pay once they received the new copy you send them.

Should they not pay at this time, you'll have enough records to show you're in the right to add a late charge for deliberately not paying on time.

6. Should I Email or Fax the Invoice?

The faster you can get the invoice to the customer, the better. Sending these in real-time doesn't provide any excuses for the customer not addressing the invoice. It's why you should ask the customer if you can email or fax the invoice to them – then follow up to confirm they have received it.

Debt Collection Experts reveal Top SME Non payment excuses

With the high street giants taking a battering via Maplin and Toys R U with both B & Q and Carpetright feeling a cold wind a warning has been issued that business insolvencies are expected to rise in 2018. Here at AVC Debt Recovery we urge all companies to adopt a more pro-active strategy to deal with the scourge of late and non-paying customers.

Dun & Bradstreet recently highlighted the continuing problem and according to their research, 58% of British Businesses are currently at risk of insolvency due to non paying clients.

Here are the most common excuses we have come across.

The most common excuses will come as no surprise to some but others may cause a raised eyebrow.

Top Ten most common excuses for late payment:

1.     The cheque is in the post – The tried and trusted classic.

2.     Didn’t receive invoices – Easy send again by email. Have it to hand and press the button on the spot.

3.     We originally disputed the invoice – Seek the proof and sort it.

4.     Account signatory is absent from work – Get the named person who fills in for them

5.     They’re not available or in a meeting– The person you need to speak to about payment, never seems to be available. Seek their direct email.

6.     Waiting to be paid myself – Commonly used amongst the sub contracting sector, but not an excuse. You are not sharing their profits so why share their liabilities or their poor cash collection.

7.     No payment run not till the end of the month – Cannot be used if you sent Ts & Cs setting out payment terms.

8.     Our payment terms are 90 days – Cannot be used if you sent your Ts & Cs and sorted out payment terms at point of sale.

9.     The invoice has already been paid – Ask for the date of payment and have your bank statement open on the call.

10. Technical difficulties – The modern equivalent of the dog ate the invoice. Always set out that you know about technology, so ask what system they are using then ask to speak to their IT man as that doesn’t sound right

There is no doubt that all businesses need to become more pragmatic and proactive when it comes to the problem of late or non-paying clients and to those worrying about losing a customer who does not pay you we say: “… if someone stops dealing with you because you ask for payment for goods and/ or services do you want them as a customer.

We are of the opinion that no business has ever lost a customer simply because they were required to pay what they rightfully owe.

Don’t forget Late Payment legislation enables you to add statutory charges for each invoice issued,

What to 

Look for in Debt Recovery Debt Collection

Looking for Debt Recovery/Collection?

Choosing a Debt Recovery/ Debt Collection Service

You have delivered work OTIF and your patience has reached breaking point. The customer who agreed payment terms has used every excuse in the book (and sometime some that aren’t even in there), not to pay you and played for time at every turn.

Therefore enough is enough. It is important you get your money, but you have to focus on running the rest of your business too. Time to turn to a debt recovery/debt collector for help, but what should you be looking for?

Can’t Pay? We’ll Take it Away.

We have all seen the TV shows featuring large gentlemen intimidating recalcitrant payers into coughing up, the popular image of a debt collector is a large necked man in a suit. We also remember Vinnie Jones in Lock Stock and Two Smoking barrels. This may be the kind of approach some businesses are looking for, but if you value your reputation and brand you are likely to be looking for a more professional approach that approaches debt recovery from the legal standpoint.

The ideal scenario is to get paid whilst continuing to do business with the customer, so sometimes credit control and nudging the customer into the position of payment is the way forward. Whatever happens you must be smart and realistic.

Employing a debt recovery company need not destroy a business relationship, in fact bringing in a third party can remove emotional baggage from the negotiation and leave relationships in better shape after the issue has been resolved.

The Vinnie Jones option is not for business.

A company that employs large necked gentleman with tattoos is not either.

 A credit control company that specialises in business debt collection can combine a professional approach with a less aggressive initial contact, quickly ramping up the pressure on the debtor to legal action only if the debtor does not respond positively.

A debt recovery solution that is Free at point of engagement is also an option now thanks to UK government legislation.

Alignment of Interests

Ask yourself what the alignment is with your debt to the ethos of the collection process.

Are you prepared to pay a percentage of  the debt to the collector or do you want all the invoiced monies? If you want the former then you need to look at an upfront  fixed fee, the latter “No win-No fee”.

Are all interests lined up in the recovery process?

Does the debt recovery company tell you your chances of recovering the monies?

Many legal firms will send an automated threatening legal letter to your debtor for a very small fee. But why would they do this? Clearly its because they hope the debtor ignores it and you have to end up spending money with them taking the debtor through the courts. It’s a simple loss leader for them. The letters have impressive-sounding titles like ‘Letter Before Action’(LBA), but the more it’s used (and there are more and more of legal firms offering this service), the more debtors are getting wise to the idea that the letter costs only a few quid and the threat is empty.

Some debt collection companies charge an upfront fee to work on your behalf or they charge you a percentage of recovered monies.  Here the fee of between 10% -20% come out of your monies so you receive 80% - 90% of your monies.

But you can avoid these and instead choose a business that backs itself with a fee that is only charged on successful recovery of your debt . This is called “No win- No fee” debt recovery from a company who use the Late Payment of Commercial Debts (Interest) Act 1998 (2013 Regulations) which enables them to earn money from the addition of fees under late payment legislation. Ultimately most debtors pursued under this methodology do not say, but it is the most effective methodology of debt recovery as the debt recovery company are highly motivated to recover the monies.

All companies who offer “No win- No fee” also operate fixed fee, but many legal firms do not operate “No win – No fee”.

Alignment of the aims is key to choosing your partner in debt recovery as then you know that the company you have chosen has exactly the same interests as you, namely to bring in the most money in the quickest possible time.

Check also that the debt collection company will give you the option to add late payment interest and their fees to the debt to be collected. You now have a statutory right to charge our debtor for these. If these additional sums are successfully collected, the debtor will in effect be paying the debt collector and you’ll be getting the service for nothing.

The Big Stick

It’s important to check that the debt collection service you employ has the capability of taking the case all the way to court in the small number of situations that require it. The reason for this is that the debtor needs to know, deep down, that this has become serious and they really need to deal with your outstanding payment rather than go to court and accrue more cost.

US President Theodore Roosevelt said of foreign policy ‘Speak softly and carry a big stick’.  If the polite insistence of your debt collection company is backed up with the credible threat of a court action, then you’re far more likely to get paid quickly and not need to end up in court at all. Check your debt collector has the ability to take your debtor to small claims court, and perhaps more importantly that their website makes it clear to your debtors that this is the case. If the debt recovery company is of the Al Capone type then they will use his phrase on how he got his own way: “… a few kind words and a loaded gun”.

Making the Best

It may be that there are serious financial problems with the debtor company and that you feel that anything you can get out before the train crashes is a bonus.  A good debt recovery company will enact credit checks and advise on the chances of a payment. Where it become a case of  “impossible to pay " rather than "won’t pay” then a good debt recovery company will not take your money or take the job on. However, when push comes to shove a good debt recovery agency will enable payment. Where financial issues are the case, it is often best if your debt collector can help you agree a payment plan where the debtor pays you in instalments over a few months, with the aim of getting paid ahead of other creditors. Check your debt collection company will negotiate for you rather than just insisting on full payment immediately and driving you into a costly and ultimately fruitless court case. Remember it is not a win if the debtor goes pop and has no assets to cover your debt. It isn’t a win till it’s in (your account). That and the fat lady singing of course.

Here at AVC Debt Recovery we work closely to align the needs of our clients to ensure they receive their monies as fast as possible offering a Free debt recovery service under Late Payment legislation and fixed fee work.

Cash is King

Late payments can wreak havoc on your business, but fortunately there are ways to ensure your clients pay on time

Cashflow is a critical concern for small businesses. Healthy cashflows provide all businesses with day to day stability and the confidence to move forward with significant business decisions, such as investing in new equipment or hiring more staff.

In an ideal world, customers would pay on time and income would remain steady but that doesn’t always happen.

Late-paying customers can easily wreak havoc on small companies’ cashflow, causing a whole host of knock-on effects that risk negatively impacting business growth.

What’s more, having those uncomfortable payment-chasing conversations causes stress, can be time consuming and distracts businesses from more productive business activities.

It is not a small problem as UK SMEs are owed an estimated £500million pounds in unpaid invoices, according to a report from MarketInvoice, an invoice-finance platform.

According to BACS the system responsible for bank-to-bank payments in the UK it is estimated that, the average UK SME is owed £36,186 in unpaid invoices, according to data from Bacs. They also set out that 60% of SMEs have faced issues with chasing overdue payments.

These figures may point to deeper problems within the UK’s business culture and this is serious for many smaller businesses. Customers pay late for a wide range of reasons, from pure forgetfulness, to their own cash flow issues (I can’t pay you because I have not bene paid is one we hear all the time) , and everything in between. But the end result is the same: you and your business doesn’t get paid on time.

There are some common sense ways SMEs can implement common sense procedures to improve their cashflow and reduce late payments.

Clarity

Make payment terms clear from the start, by defining them in a contract or a set of Ts & Cs. All businesses should have Ts & Cs. When we say contract a simple letter or email setting out payment terms and interest chargeable on any later payment ts is a powerful contract under English law. Being British we sometime apologise when asking for money, but every good salesperson or service provider should never be afraid to ask who is paying me and when.

Terms should always include the full amount due, due date and any penalties for late payment. We call this PREASS  Preclude Ambiguity at Source of Sale. This stops customers claiming that they ‘didn’t know’ the invoice was due.

Be Prompt

Invoice a soon as you have done the work or as quickly as you an afterwards. Always put payment terms on the invoice, and double check your invoices for accuracy to avoid anything that may cause unnecessary delays.

Be Assertive

Don’t back down. If you state late fees, make sure you implement them. The law on late payment is there for a reason. You shouldn’t need to be fearful or apologise when applying it. Would a customer seek a refund if something was not right? According to the UK government, customers must pay within 30 days of receiving your invoice, unless a different payment window is agreed. You also have the right to charge interest of 8% plus the Bank of England base rate on unpaid invoices under late payment legislation and much easier to implement if it is contractually set out.

Make paying easy

Be clear on payment and make sure the customer is able to deliver what you are asking them to do. No good sending BACs details to a business that only pays by cheque. Set the payment details out in any contract and put them on the invoice. Let your customers choose their preferred payment method, then set up a system where they can pay you instantly. Send them payment reminders before every payment is due and make sure your bank information is displayed clearly and accurately on every invoice.

Cashflow problems can be really damaging for your business as you can run a business without profit, but you can’t run a business without cash. Use common sense and simple procedures to be ahead of the game in getting paid on time. so it makes sense to take common sense procedures to handle late-paying customers. The wide range of tech solutions now available offer you plenty of choice for your ongoing business needs. Solve your cash flow challenges today and tomorrow will be an easier day

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This main text of this article was taken from an article originally written by GoCardless, the UK’s leading direct debit provider.

If you charge compensation for collecting overdue debts then read this

Introduction

Most creditors are familiar with the Late Payment of Commercial Debts (Interest) Act 1998 which entitles them to interest for late payments and the right to claim reasonable debt recovery costs, unless the supplier has acted unreasonably.  In addition to the foregoing creditors can also charge compensation for the recovery of a debt.  The Late Payment of Commercial Debts Regulations 2013 provides “If the reasonable costs of the supplier in recovering the debt are not met by the fixed sum, the supplier shall be entitled to a sum equivalent to the difference between the fixed sum and those costs”.

The Problem

The difficulty is, of course, in being able to take court action against a debtor and include, as part of the sum sued for, ‘debt recovery costs’ as these actual costs have not yet been incurred.  A similar point was raised in the case of BHL V Lenmi ABL Ltd [2017] EW HC 1871 QB which involved debt factoring.  The facts of the case were as follows:   Leumi ABL Limited (the “Factor”) entered into a factoring agreement with Cobra Beer Limited (“Cobra”).  Sadly Cobra had financial problems so their parent company BHL signed an indemnity agreement in favour of the Factor.  The terms of this were that BHL agreed to indemnify ABL for all amounts due under the factoring agreement.

The factoring agreement contained clauses permitting ABL to charge a collection fee of up to 15% if ABL required Cobra to repurchase any receivables and Cobra failed to do so within 7 days of such a demand.  This collection fee was in addition to any other fee payable by Cobra to ABL which Cobra expressly acknowledged constituted a fair and reasonable pre-estimate of ABL’s costs and expenses in providing such a service to Cobra.

Following ABL’s demand that Cobra repurchase all of the receivables under the agreement which Cobra failed to do so within 7 days, ABL took over the collection of the receivables.  They notified Cobra that it would be charging a collection fee of 15% of all receivables collected.

ABL collected Cobra’s receivables in the total amount of £8,000,000 and charged 15% of the amount collected.  This resulted in a collection fee of £1,200,000.

Cobra’s Parent BHL initially pad a substantial portion of this collection fee amounting to £950,000.

However BHL has second thoughts and sued ABL arguing that ABL were not entitled to charge a collection fee of 15%, that they had paid this money by mistake, and that ABL should return the amount paid.

The court decided ABL was not entitled to charge a collection fee equal to 15% of the amounts collected and found that their actual collection costs and expenses for the collect-out were £33,260.

The Court held that ABL’s collection fee should be no more than 4% of the amounts collected, which worked out to £320,000.  Following adjustment to the court process the Court ordered the Factor to repay £735,000 to the Parent plus interest.

Why did the Court come to this Decision?

The court held that the purpose of the clause was to enable ABL to recover future costs and expenses to be incurred by them if they had to collect the receivables.  As such these costs, by  their nature, had to be an estimate.  However the agreement provided that this fee could be incurred prior to ABL actually incurring those costs.  As such the court would allow ABL a degree of flexibility because they would be unaware what the collection costs would be.

Of course the obvious issue was that the agreement allowed ABL to set the recovery fee in respect of future recoveries.  As such the court were of the opinion that ABL’s discretion had to be qualified to prevent their discretion being abused. In the court’s opinion ABLS were required to identify the likely collection costs and to attribute such costs as a percentage of the sum to be collected.

Because ABL had always charged the maximum of 15% automatically, in the court’s view ABL had not exercised any discretion.  In passing judgment the court said what they needed to do was not to establish the actual costs of collection but what these might be if what that percentage would amount to if ABC were acting reasonably.  After hearing expert evidence in the court’s opinion 4% was the maximum which ABC could have charged if they had exercised their discretion reasonably.

Conclusion

If the same reasoning is applicable to the Late Payment 2013 Regulation it is clear that whilst there may be an entitlement to charge compensation in terms of the Regulation the actual amount will have to be reasonable.  The creditor may well have to demonstrate this to the Court.  The practical difficulty is that the actual amount could become the issue in itself in debt recovery litigation with the claimant having to justify that the estimated compensation is reasonable.  So it may be advisable for claimants to select a realistic estimate for compensation and be prepared to justify this to the court rather that selecting an exorbitant amount which will not be tolerated.

Debt Reminder Letters – Step by Step Approach

If you consider yourself the kind of business that finds it difficult  having to deal with customers or clients who have an outstanding account or an unpaid bill that needs collecting, then you not alone. It is a fear of upsetting someone or losing a customer for daring to ask for what is yours affects many people in business.

No one likes to risk destroying customer goodwill by having to request assertively or demand payment, but in many cases, there is no other option.

Before you find yourself having to go down that route though, there are steps you can take beforehand to try and avoid the situation escalating to such a level.

Ensuring that payment due by dates and terms are clear, and also indicating any interest that will be applicable if payment isn’t made by the date agreed will go a long way to helping this part of your business run a lot smoother.

These should be clear in your Ts & Cs and we say to all natural salespeople who run businesses: Never be frightened to set out what payment terms are at points of sale.

Even taking these steps can’t guarantee that you won’t run into issues, and when that happens you’ll want to take an approach that is both firm, but doesn’t run the risk of souring relations with a valued client or customer.

Step 1 - Keep It Friendly & Informal

The first step should be to issue a short, friendly reminder along with another copy of the invoice. Many times an unpaid bill can be a result of the client simply forgetting. We all know that running a business is time-consuming, and it’s easy to forget what needs paying on what date. In most cases this will result in an apology and payment being made, which is the ideal outcome.

If payment isn’t made within a few days of the letter being delivered, a more direct approach may be required.

Step 2 - Be More Direct

Your second letter should be a bit more formal, and with directness replacing the friendly tone of the first notice you sent them. At this point, the failure to pay what is owed can’t be put down to forgetfulness. 

Step 3 - Introduce The Threat Of Legal Action

If payment still isn’t forthcoming, you’re going to have to get tougher, laying out a set date by which payment must be made otherwise legal action may be the result. Usually, payment within seven days is a more than reasonable demand, giving the client time to read the letter and act upon it.

Step 4 - Issue A Final Notice

If the threat of legal action hasn’t prompted payment to be made, then you issue a final notice demanding payment and setting a date whereby legal proceedings will be launched against them.

One piece of advice that will prove valuable is to not lose your composure or get personal when writing these letters. It won’t make you feel better, but will definitely lose you the customer whereas the law is respected. So keep it professional, and to the point.

If you find this process draining and it is taking valuable away from your business expertise and skills as well as other customers then the best option is going directly to a reputable debt collection company who can take the stress and hassle away from you. They also have far more experience in these matters and know how to approach such clients in a manner that will see a speedy and satisfying result.

Credit Control and Further Action

You issue an invoice, chase then get to the end of your credit control procedure and you still have some unpaid accounts, so what are the options?

Is your customer giving reasons for not paying?

Sometimes things go wrong or your customer has a complaint, rightly or wrongly. So, the first question is whether or not they have a genuine complaint. If they have then fix it and analyse the reason for the error and put in place measures to preclude it happening again.

Is there is a good reason?

If your customer has a good point then sort it out through negotiation. Always aim to have a disputes resolution process in your contracts and/or Ts & Cs, so you can refer to that.

There isn’t a good reason or the debtor doesn’t respond

If your customer is unresponsive or the points raised are not good reasons for failing to pay, your options are as follows:

1. Letter before action

You will need to start with a Letter Before Action (LBA). This is a letter telling your customer that the next step will be court proceedings, if the matter is not resolved. Court rules give details of the information that should be given in the letter. From October, there will be special requirements for a letter before claim to an individual, including a sole trader.

2. Court action and default judgement

If you start an action and your customer doesn’t file a defence you will be able to get judgement in default of defence.

3. A defence is filed

Sometimes an unresponsive debtor, when sent a court claim form (even though they have no real defence), will file a defence that raises issues which may or may not be true. The law says that everybody is entitled to a civil hearing, so there is nothing one can do about that, but most cases do not go to court and are settled by negotiation once any papers are issued.

4. Insolvency

Provided the debt is undisputed, then, as an alternative to a debt claim you could consider the threat of insolvency. If the debtor is a company, the debt just needs to be at least £750 and you can serve a statutory demand. So, the threat of insolvency proceedings can be very effective.

For an individual, the debt needs to be at least £5,000.

For most companies having a good set of terms and conditions or a contract that clearly sets out payment terms and clear sequential steps of dispute resolution (always set out to try and solve it between yourselves first) and a good chasing process precludes debt recovery issues.  

Government Announces Mandatory Late Payment Reporting

The Government has published their proposals to require large companies to publish their performance when it comes to late payment. This comes after repeated surveys show that UK business is still dragging it's feet when it comes to paying invoices on time - one recent survey showed that 39% of all invoices issued in the UK are paid outside of terms.

Late Payment is more than just an irritation - it can cause real problems for many smaller businesses who rely on prompt payment and a regular cycle of cash flow to be able to pay their own bills. As a result, the Government announced back in 2014 that it would set up a public register to "name and shame" late payers. Over two years later, it looks like this is finally about to become a reality.

What exactly are the proposals and who will they affect?

In short, the Government is requiring businesses to publish information about their payment practices. These will be publicly available on a website, allowing anyone to see at a glance whether a particular company pays their invoices on time or not.

The first thing to note is that the reporting requirements only cover medium and large businesses. This is defined as any company that meets at least two of the following criteria:

• £36m annual turnover
• £18m balance sheet total
• At least 250 employees

Those accountants among you may have noticed these criteria are the same as those used in the Companies Act to define a medium sized company, and it is expected they will change in step with any changes to the definitions in the Companies Act.

For a full version of this arrticleeicle

What needs to be reported?

Once a company falls into this category then from the second financial year on wards (so the following year in which they exceed the thresholds so giving one years' grace) the company must report twice a year on the following information:

• Details about standard payment terms including the length of time allowed for payment, the maximum payment period, whether this has changed during the year and, if so, how suppliers were notified
• Information about the company's dispute resolution process
• The average number of days between receipt of invoice and payment for all qualifying contracts
• The percentage of payments made between a) less than 30 days, b) 31 - 60 days and c) 61 days or more
• The percentage of payments not paid within agreed terms
• Yes/No confirmation of various criteria such as whether the company allows e-invoicing, supply chain finance or whether the company is a member of a payment code
• "Qualifying contract" in the above covers pretty much any B2B contract with a substantial connection to the UK which is for goods, services or intangible property. There is an exclusion for financial services.

How and when should this be reported?

Still not much detail at the moment on how this will be reported and the Government have stated that there will be a webpage on the existing www.gov.uk site where this information will be shown.

What is clear is the frequency of reporting. Every qualifying company will have to provide the reporting information twice a year, within 30 days of the end of either the first half or the second half of the company financial year for payments made in that six month period.

Will this work?

It is good that action is being taken to tackle the culture of late payment within the United Kingdom and we applaud the Government initiative as a long-overdue start to the process of increasing transparency on this issue.

Of course the actual delivery of the reporting is crucial to ensure that creative reporting does not hide the statistic that percentage of invoices paid cover up the length of time it has taken to pay – which is where the real problem lies.

A simple resolution is to give the Small Business Commissioner the power to investigate complaints about inaccurate reporting and teeth to insist those qualifying companies set out reporting formats in a clear concise manner.

These rules only apply to medium and large businesses which only covers 2% of businesses in the UK, but the long journey towards on time payment starts with one small step.

What other options are there?

The issue remains that whatever governments do they are always some way behind what is needed by SME’s and businesses trying to get paid and stopping late payment having a serious effect on the bottom line. That is why when faced with a late payer AVC Debt Re4covery are ideally placed via their ‘no win no fee’ proposition to get your monies and this remains your best option.

While government talks we deliver debt recovery for business, notwithstanding that any Government action against late payment is welcomed.

New Pre Action Protocol (PAP) 

Civil justice in England and Wales is well known for having prescribed overtures to the litigation procedure. These are termed Pre-Action Protocols (PAPs). The word "protocol" suggests a rigidity, which falls slightly short of the Civil Procedure Rules themselves, and terminology does indeed imitate reality.

Sanctions for not following a protocol have not been as draconian, or as rigidly enforced, as the rules themselves, but the courts do expect compliance where possible.

For years now, there have been formal PAPs for numerous differing areas of legal dispute, such as clinical negligence, housing disrepair, construction, injury and industrial disease. Until now, however, there has not been a PAP for debt.

The first PAP for debt work comes into effect from the 1 October 2017. From that point on, the courts will expect you to have followed the protocol in any “business” dispute over a debt.

The qualification is due to the fact that not all business disputes are covered. The debt PAP applies to the following disputes only:

Business to consumer

Business to Sole Trader

It does not apply to business-to-business debt (other than above), nor does it apply to consumer-to-business disputes.

It is easy to see that the intention here, in addition to introducing a formalisation of the pre-litigation process with a view to reducing the pressure on the courts, is to retain an equality of arms between the parties.

Letter before action or Letter of Claim (LBA)

There are several elements which must be included in your LBA to the debtor before proceedings are started. The LBA should contain the date and your return address, together with the following information:

1. The amount of the debt
2. The amount of interest and charges, and whether they are continuing. If not included in the letter, an up-to-date statement of account for the debt together with interest and any other charges must be sent separately
3. Written contract or other agreement in writing - you must offer to send a copy of any documents in which the terms of the agreement were reached on request
4. No written contract - you must include a brief account of where, when and with whom any oral agreement was made, what was agreed and if possible the words that were spoken. If the debt has been assigned, you should provide details of the original debt and creditor, when it was assigned and to whom
5. If an offer has already been made by the debtor, why their offer is not acceptable
6. Details of how the debt can be paid, including options for payment

LBA – enclosures

The new PAP sets out that you MUST send the following:

1.   Information Sheet

2.   Reply Form

3.   Financial Statement form.

Service of letter before action

The new PAP MUST be sent by post, but can also be sent by email or fax if you have other contact details, but it MUST, however, be sent by post.

No Reply

The debtor has 30 days to reply. If the debtor does not reply to the LBA within 30 days of the date of the letter, the creditor may start court proceedings, although note the wording; "If debtor doesn't reply” NOT "if a reply is not received". It's therefore advisable to wait until a few days after the 30 day period expires, in case the debtor's reply is posted late.

Reply from debtor

The debtor is required by the PAP to:

1. Use the Reply Form for their response
2. Request copies of any documents they wish to see
3. Enclose copies of any documents they consider relevant

If the debtor replies, the creditor should not start court proceedings less than 30 days from receipt of the completed Reply Form, or 30 days from the creditor providing any documents requested by the debtor, whichever is the later.

The creditor should be prepared to allow the debtor more time if there is evidence that the debtor is actively engaged in the PAP process, or seeking debt advice, or seeking time to pay.

If the creditor does not agree to a debtor's proposal for repayment of the debt, they should give the debtor reasons in writing.

A partially completed Reply Form should be taken by the creditor as an attempt by the debtor to engage. The creditor should attempt to contact the debtor to discuss the Reply Form and obtain any further information needed to understand the debtor's position.

Early disclosure of documents and information is encouraged, and the protocol requires the parties to provide full disclosure, sufficient to enable them to understand each other's position. Any documents requested should be provided within 30 days of the request.

The spirit of PAP and Alternative Dispute Resolution

Unfortunately, the completed Protocol provides no option for a reply not using the Reply Form. The answer to this anomaly, I believe, can be found in the court's approach to compliance with other Pre-Action Protocols, and that approach requires compliance with "the spirit" of the protocol.

S2 of the PAP covers the aims of the protocol, which are to encourage engagement and promote early settlement, thereby avoiding litigation. Therefore, if the defendant replies by means other than the Reply Form, the court will probably expect the creditor to give them the benefit of the doubt, and continue trying to service the aims of the protocol.

If the parties cannot reach an agreement, they are required to consider Alternative Dispute Resolution, which can include mediation, although this is no more than a mirror of the compulsory requirement encompassed in the Allocation of Cases to the small claims track.

Compliance with PAP for debt resolution

If a matter proceeds to litigation, the court will expect the parties to have complied with this Protocol. The court will take into account non-compliance when giving directions for the management of proceedings. The court will consider whether all parties have complied in substance with the terms of the Protocol, although it is unlikely to be concerned with minor or technical infringements, especially when the matter is urgent.

For further information about the court's approach to compliance, see the Practice Direction - Pre-Action Conduct and Protocols (paragraphs 13 to 16).

Since the 2013 changes to Court procedure, encompassed in the Legal Aid, Sentencing and Punishment of Offenders Act (2012), the Courts have been much harsher on, and much less tolerant of, non-compliance with the rules. This extension of the Pre-Action Protocol regime to debt claims means that while you may not before have been penalised for failing to follow accepted procedure (albeit informal), you will now.

It is therefore crucial that, in the event of a dispute, you ensure that you follow the Protocol as closely as you follow Court Orders and the rules themselves. As if you fail to do so, even if you win your case, your victory could be soured by costs or other penalties being imposed on you.

This article was first published by Dean Talbot, Director of Small Claim Assistance

Duplicate Payment and Debt Collection Questions and Answers

Where someone has made  a duplicate payment of an invoice and the recipient of the duplicate paymnent is slow to return the payment, is it feasible or correct to threaten to apply interest in such circumstances?

A claim for recovery of a duplicate payment of an invoice, would be a restitutionary claim rather than a contractual one. A claim for interest would not therefore, be made under the contract between the customer and supplier or under the Late Payment provisions.

However, where a duplicate payment has been made, you may be able to claim compound interest under the House of Lords' ruling in Sempra Metals Ltd v HM Commissioners of Inland Revenue and another [2007] UKHL 34.

Could it be considered harassment to demand payment over the phone?

Harassment is a course of conduct which amounts to harassment of another and which the defendant knows or ought to know amounts to harassment.

What constitutes harassment depends on the facts; where a creditor is professional in his approach to credit control (i.e. by calling a debtor in a professional and non-threatening manner at reasonable intervals after an invoice becomes due), this is unlikely to amount to harassment.

Needless to say, if a creditor were to call a debtor regularly in an aggressive and threatening fashion or where, for example, a creditor called the debtor at unreasonable times of the day, requesting payment over the phone could indeed amount to harassment.

The rules on what constitutes harassment when collecting debts are quite clear. Calling a debtor is an important part of any credit control process. The key is to approach these calls in a professional fashion.

If a company has ceased trading, can we chase debt against the director’s other businesses?

A limited company has its own legal personality independent from its directors. If Company A is liquidated and Company B starts trading, Company A and Company B still have separate legal personalities, even where the directors of both are the same people.

Therefore, a creditor of Company A cannot pursue Company B for Company A’s debts, simply because the directors of Company A and B are the same.

Where a director of Company A has given a personal guarantee to the creditor, or in extremely limited other circumstances, a creditor may be able pursue the directors of Company A personally. However, in the absence of a personal guarantee, this will be an exceptional remedy rather than the norm.

This scenario, which is not uncommon in practice, highlights the need for a creditor to closely monitor the credit being afforded to limited companies and the benefits of obtaining a personal guarantee from a customer’s director, where the customer is a limited company.

How do you credit check a sole trader or director? Does it require their consent or can it be done without their consent?

Some businesses may be able to undertake credit checks on a sole trader or director using a credit reference agency. If a business does not have access to such a facility, a business can check whether a sole trader or director is a home owner via a Land Registry search.

The original text was first written by Maria Koureas-Jones from Woodfines Solicitors

Statutory Demands: Quick Recovery

Introduction

A relatively quick and inexpensive way of recovering cash from a slow paying limited company is the use of the statutory demand for payment.  Many creditors prefer this to taking court action which is perceived as being both slow and costly.

What is a statutory demand?

The starting point is the Insolvency Act 1986.    In terms of Section 122 of the legislation a company may be wound up if it is unable to pay its debts.  The definition of “inability to pay debts” is contained in section 123 (1)(a) of the Act.  This states that “a company is deemed unable to pay its debts if a creditor to whom the company is indebted in a sum exceeding £750.00 has served on the company, by way of leaving it at the company’s registered office, a written demand (in the prescribed form) requiring the company to pay the sum due and the company has for three weeks thereafter neglected to pay the sum …”

What happens if the debtor disputes the Demand?

Failure to respond to the Demand can have draconian consequences leading to the creditor petitioning to have the debtor company wound up.  Accordingly the Demand does give the debtor company the option to dispute the debt by completing an appropriate section detailing why the sums claimed are not due.  This should be returned by the debtor to the creditor or creditor’s solicitor that prepared it.

What sometimes happens is that the debtor company details a dispute which the creditor states is not genuine.  In those circumstances can the creditor simply go ahead and petition for liquidation?  There have been a number of cases which have focussed of whether this is possible.  The issue debated before  the Court is whether or not the dispute is genuine.  If it is then it is highly unlikely that the Court will allow the Petition to proceed.  Often the matter is aired before the Court with affidavit evidence being led as to the nature of the dispute.

In those circumstances it is probably better to abandon the liquidation petition and to proceed with a court action in the knowledge that it is likely to be defended.  It is submitted that this should not be seen as a failure.  After all what does the creditor want to achieve by serving a Demand?  The answer of course is to get paid by the debtor company.  If that company simply ignores the Demand and is prepared to take the consequences of going into liquidation then it is unlikely that the creditor will achieve little more than a few pence in the pound by way of a dividend payment.

However, if there is a genuine dispute then the Demand process really should not have been used in the first place and it is entirely reasonable to expect the debtor company to respond by denying that the sums due under it are due.

Of course the creditor may say that the dispute is not genuine.  However, this really has to be up to the Court to decide.  In any event the “enemy” of a successful recovery is not necessarily denying the debt is due.  The real danger is being ignored.  A debtor company that reacts to the Demand by submitting a denial cares about being wound up and it may well be that the company will have assets to satisfy the creditor after court action has been raised which could well settle shortly after it has been raised.

Originally published by Stephen Cowan, Managing Partner, Yuill + Kyle
Debt recovery + Credit control Lawyers, Scotland

Debt Management: What Are Your Options?

An issue faced by many companies is the time and cost of chasing down money owed. This can be an onerous burden. However, there are steps you can take to ease the process

For many businesses, dealing with late or non-paying customers is part of doing business and for some trades and businesses it may need to be factored in. For businesses starting out, expanding or growing quickly the late payers and non-payment allied to the time and effort required to chase payments can be extremely frustrating and costly to the point of a dangerous risk to your solvency.

What are the warning signs?

To tackle the problem of bad debt, all businesses need to stay alert and spot signs that an invoice issued to a  customer could be becoming a problem. If a customer normally pays its invoices on time after 30, 60 or 90 days but payments suddenly start to slip and excuses suddenly start or you can never get hold of the accounts team  this could be a sign that they are experiencing cash-flow difficulties.

Another indicator could be if a customer suddenly starts requesting a breakdown of the invoice or a purchase order number after the invoice payment has become due to you. While such requests may of course be entirely justified they could also be symptomatic of the company suffering issues and using stalling tactics because they are experiencing financial problems; or.

you suddenly start getting queries about the payment terms in your terms and conditions.

All businesses should check the credentials and credit worthiness of customers at the outset and monitor the relationship as it develops, but very often the euphoria of the sale overtakes pragmatism and the thought of losing the sale eclipses the right approach.

When dealing with big companies you should also keep a close eye on media reports as these could provide advance notice that a customer is heading for business failure.

If you have salespeople who communicate with people in offices they can usually tell you what is going on, with the first tell tackle sign of cash flow issues is when workers remark that office supplies start getting tight.

Forewarned is forearmed is the best policy. Always try to give your business time to mitigate any financial risks.

Most businesses with shorter trading histories tend to lack the skills and resources to handle debt management issues in house as their success is built on selling and that is what drives most business. It is a rare salesperson that wants to turn away a sale because of worries about payment.

There is also a fallacy amongst many companies that engaging debt recovery or seeking help in collecting revenues is expensive and an admission of failure and unless 100% can be recovered it is not effective.

Debt recovery offers a return on something. We say that 85% of something is better than 100% of nothing and 100% of nothing will be the return if no action is taken. The law also sets out that statutory charges for each invoice and debt recovery fees can be added on so the law is on your side in debt recovery.

As well as helping to recover monies more quickly and prevent late payers turning into a bad debt, early intervention can help to prevent the situation from spiralling into a costlier legal dispute.

Who can you turn to?

When selecting any debt recovery company to provide services, businesses should make sure it has the understanding of any agreements and the contract you have as well as the ways you wish to do business.

Do they have the flexibility to sort the matter?

The ideal is to get paid quickly and retain the customer.

It may well be that a debt is not recoverable, so make sure your debt recovery agency understand contract law and have the expertise to sort out terms and conditions and contract issues that may have arisen.

Make sure that any debt recovery agency puts prevention rather than cure at the top of their list, and can add value to your business proposition.

How to deal with high profile clients

When dealing with key customers, small and medium-sized businesses can be understandably reluctant to put pressure on them to make payments in a timely fashion.

If your terms and conditions say 30 days it means 30 days and is not a target to perhaps aim for.

Some large companies pay based upon their size and power. We were made aware that a large multinational had accountants who purposely did not pay suppliers until 30-60 days beyond agreed terms and boasted that no supplier would dare invoke late payment legislation and add charges under Late Payment Legislation for fear of being delisted..

There may be a perception that the trading relationship is a valuable one, when in fact hidden financial costs or repeated late payments are eroding any profit. In some instances larger companies may put pressure on their supplier(s)  to accept longer payment terms or demand discounts. Such behaviour could be a sign that the customer is struggling financially and may have been refused credit elsewhere.

In order to prevent bad debt issues escalating, businesses should make sure they have efficient cash collection systems in place. It does not have to be complicated, simple software will tell you when monies are due. If the customer has signed up to 30-day payment terms, you should ensure you ring them promptly if this date has passed. Apply the same effort to cash collection that you do to sales.

Would any good salesperson not follow up, so why not apply this to being paid?

After 45 days, the business should be sending final demands to the customer quoting Late Payment Legislation and adding the Statutory Charge under law.

If no payment is made by 60 days, then immediate recourse to debt recovery should be sought. Making it clear (preferably in your terms and conditions) that the business has a strict policy in place to tackle late payment of undisputed invoices and will apply The Late Payment of Commercial Debts (Interest) Act 1998 can help to lessen the risk of bad debt arising and staying in touch with late payers can sometimes shed light on the extent of the customer’s financial difficulties.

Going to court

We always say that going to court is the last resort, but issuing a claim via the court often spurs late payers into action and the fees can be added to the debt.

In most cases, for claims of less than £10,000, it is possible to make use of the small claims track court system.

The system is simple and most debt recovery companies will walk you through the process, but being realistic about what you can claim is always the best policy.

A realistic business debt that is recoverable for a debt recovery company ids £600.00 plus.

It is no good winning in court if there are no assets, but a good debt recovery company will look at all matters.

Whether you are a start up, a fast growing or a fully established business, it is important to establish the right policies and procedures from the start and this should help to manage and stop any late payer turning into a bad debt.

Here at AVC debt Recovery we offer a full range of services from an initial no obligation conversation right up to recovery in the High Court.

LATE PAYMENTS AND BUSINESS: THE FACTS

There are 4.8m small businesses in the UK and the number is growing as is the propensity for late payments.

Here are some facts provided by Sage.

£30,000 plus.

1 in 3 small businesses are owed more than £30,000 in outstanding invoices

4 Hours plus.

1 in 5 businesses are spending at least 4 hours a week chasing outstanding invoices.

60 Days plus.

2 in 3 small businesses say they have had to wait more than 60 days for an invoice to be paid.

90 Days plus.

Almost 50% say they have had to wait more than 90 days.

Here at AVC Debt recovery we never feel guilty about asking late payers for our client’s money and neither should you.

Many small businesses dream of getting the large accounts with big business, only to find that very often they are the worst offenders when it comes to late payments and the life blood of any business - cash- is being squeezed out of them.

We have spoken to a multinational accounts department who have openly stated that their policy is 90 days plus despite promises of 30,40,50, 60 days and the law being against them. Another serial late payer is the public sector, but more often than not that is caused by poor communication and the specifics and machinations of a convoluted payment process.

Top 10 Excuses for Late Payment

1. “The cheque’s in the post”

This one is still in circulation, but less so nowadays as bank transfer has now reached over 50% of all business payments

Simple way to overcome this is to create a facility to accept bank transfers and even accept card payments. If you have card payments you can accept payment on the spot and offer to cancel the cheque. Be creative: offer to deduct the £12.00 fee of stopping the cheque from the invoice and issue a credit there and then.

2. “No one is available to sign the cheque”

This one that should be ironed out at point of sale by always asking who pays you and how, as it will come up that perhaps the business may only have one or two people who are approved signatories. Ask to speak to that person, as if that person is that important they will not go anywhere without a mobile telephone and unless they are at the peak of Everest then there are not many places left in the world without a mobile signal. Use this as an opportunity to generate a more efficient alternative payment method or to upsell to the owner.

3. “I haven’t been paid by my customer yet”

Another common excuse, this one essentially moves the cash flow impact from their business to yours. This is not an acceptable excuse and you must be clear that you have no contract with their customer and there is no flow down of liability. You are not responsible for their chasing procedures. This is the time to apply late payment interest charges under the 2013 Regulations as they are then able to flow these down without objections. The additional costs enabled by government legislation should be enough of an incentive to get them to pay.

4. “I haven’t received the invoice”

Be ready for this one and have an invoice sitting there on screen when you dial the number and send it as an email attachment whilst you speak to a named person and get confirmation they have received it.. That way you can clarify there and then that the invoice is not disputed and you want immediate payment. If you use accounting software, you should have a record of when the invoice was sent and if it was delivered successfully, so you’ll be able to prove that it was sent. If not then the email is the record. Don’t get bogged down with whether it was received, use this opportunity to get a payment date.

5. “I need to set you up in my online banking”

OK, but insist that until that is done your contract is based upon what was agreed, just as the price does not change. However, online banking set up is now fast and efficient by all bank providers as they are all vying for business. It can be done in a few minutes.

6. “We’re changing bank  accounts”

Nobody can exist in a business without a bank account, so this excuse does not hold water. However, always turn the excuse intro an opportunity and get a payment time. Add on interest and tell them that the new bank will expect this if they are not delivering. The Current Account Switching Scheme, which was introduced in 2013, changed the time to switch accounts from 30 days to just 7 days. At the time 36 banks had signed up, so it’s unlikely that your customer will be without an account for more than a week. They should be able to pay as soon as the transfer is complete. 

7. “We don’t have a pay run until next month”

Again this is all part of the due diligence at point of sale. Often businesses only have a payment run once a month and more often than not rob Peter to pay Paul. If that is the case then ensure you are on the payment run for the following month. Get the date of the payment run and mark it in your diary to telephone 1 week before the payment rum to check that you are on there, then telephone again 3 days prior, as getting put on then bumped off is a common occurrence for monthly payment runs.

Then ensure that you get your invoices in 7 clear days before any payment run and perhaps follow up to see if you are on any payment run. Even companies who operate a strict one payment run have flexibility to make a one-off payment to clear the invoice.  Ask to speak to the FD, MD or business owner as they will usually rather pay than discuss late payments.

8. “We always pay within 60 days, not 30 as it says on your invoice”

Make sure that your payment terms are clearly stated in any contract or Ts & Cs. If you do not have any then make sure you get some and send them electronically with every sale. “Please find attached our terms and conditions,” and make sure your payment terms are clear and unambiguous. It is imperative that payment terms are discussed at point of sale and once sent then those terms apply, despite what anybody says. Reissue a copy of the invoice via email or a quotation which shows the terms and explain that you’ll apply Statutory Late Payment Charges  and interest at 8% above base rate = 8.25% on any overdue amounts.

9. “We’re not happy with the goods / service”

This usually only comes up when someone does not wish to make payment (why wait 30 days to complain about something you are not happy with?). We have even seen cases where testimonials have been applied on the quality of the service, yet later the quality of the deliverable is disputed. This needs addressing without prevarication. Ask for details about what was unacceptable and how this can be put right. Make an immediate flight or fight decision about whether they have genuine grounds for complaint and whether it’s feasible for you to rectify it. If you can, do it immediately and then reissue the invoice. If not, then negotiate a credit against works, but if you are of the opinion or do not believe they have a case, continue to pursue the whole outstanding amount. Always try to have dispute resolution in your contracts and terms and conditions so the process is clearly mapped out.

10. “The computer is down”

This is a surprisingly common excuse but the reality is that as most business are now so completely reliant on computer systems to do the most basic tasks, it’s unlikely to be down for long. Insist that payments are made as soon as possible or offer alternative methods, like taking the payment by phone. 

All the tips in the world should not preclude common sense at point of sale, getting an agreement on the payment terms and a set of terms and conditions.

These tips will help you deal with the those customers who are forgetful and perhaps a bit disorganised, but those who have no intention of paying are a different kettle of fish.

It is imperative that those late payers who have the potential to become bad debts are dealt with and we always advise that when you feel that is beyond your ability to chase then instruction to debt recovery is sought, so you are at the front of the queue for any payments because if they are not paying you the chances are they are using your monies elsewhere.

Here at AVC Debt Recovery we look to act for our clients to get their monies into their accounts either no win no fee or via a fixed fee from the invoiced amount.

If you require a free debt recovery consultation pleas e visit our website www.avcdebtrecovery.com. We also check contract and draft terms and conditions.

A business with an occasional debt

So you're a Business with an occasional debt?

Like many companies now stated to be owed £52bn-61bn in overdue payments you most likely get the odd debt cropping up every now and again? These may be from other businesses or even individuals. Many businesses often decide to just let these debts pass (we have seen passes up to £50k), thinking it's not worth the hassle to try to recover them. In contrast, other firms decide to try to recover every debt no matter how small (as a matter of principle) - after all nobody likes the feeling of being owed money after delivering services and/or goods to someone.

£6 inc VAT to recover your money...how does that sound?

If you consider that our Letter before Action (LBA) letter is priced at just £6 inc vat then really no amount of money owed to you (debt) is too small to try to recover. We can also send an email and a text to your debtor too. As William Lowndes (1652-1724) famously said:   “… Look after the pennies and the pounds will take care of themselves.”

Added to this our full range of services are no win no fee or fixed fee on collectable debts.

Visit us on www.avcdebtrecovery.com for access to our £6 LBA for any business debt over £600.

If you would like to see a sample LBA then please email info@cwlegalservices.com and we'll email you one over.

Worried about Larger Debts?

Perhaps you have the one large debt, but you are worried about your debtor's solvency, then please email Colin Ward on info@cwlegalservices.com  or call our office number on 0333 121 0161 for complimentary consultation with a debt recovery expert.  Remember, if you are chasing someone for money then others probably are as well so use our services to get yourself to the front of the queue to get your monies into your account.

As we always say: ‘Don’t let a late payer become a bad debt’ and ‘It’s not a great sale until the monies are in your account’.

Prior to the engagement of AVC Debt Recovery the Company that owed me money would not communicate and stated they were not prepared to pay anything of a £20k debt to my company.
The help and persistence AVC not only brought a representative from their Company to have serious  dialogue but they achieved a satisfactory settlement of the matter.
(Keith Askham - Java Facilities Limited)

Here at AVC Debt Recovery we advise all our clients that prevention is better than collection, even if total prevention means we will effectively be out of business. Whilst nothing can prevent a common cold or a bad payer here are our top tips.

1. Agree what is agreed at point of deal. Agree what you will provide, when and for how much. Confirm it in writing, even a simple email is a powerful contract.
2. Don’t let the euphoria of sale blind you to the basic fact that it is not a great sale until the money is in your account.
3. Know your customer before you extend them credit - credit checking is often looked upon as a cost, but can be a sound investment even if the credit check precludes a sale.
4. Never be frightened to ask how you are going to get paid, who is going to pay you and any specifics required for you to get paid OTIF.
5. Always send over a set of Terms and Conditions when you confirm any sale.
6. Invoice and deal with any disputes promptly
7. Have in place commercials that tie in with your Ts & Cs and execute a clear and concise credit control policy
8. Chase for so long then know when to pass the outstanding amount (debt) to a professional debt collection company.

If you are experiencing any issues with late payments and are worried that a later payer may turn into a bad debt please call us for a no obligation consultation with a debt recovery expert.

Claiming Monies You are Owed Via the County Court System

What scene comes to mind when you think about making a legal claim for monies owed to your business? If you’re imagining a scene out of the TV or films with people in wigs and sharp tongued barristers interrupting on points of law, and being able to turn cases in their client’s favour, or Deidre Rashid (Barlow) standing in the dock) in a creaking wooden box, then you’re perfectly normal.

However, you are completely wrong and this image of a court endures in the public consciousness precisely because of its intimidating nature and the power of TV and film to shape our consciousness. A court scenario is manna from heaven for film makers and novelists, such a John Grisham, who like to build tension. However, it means very little to real people seeking their monies as a debt in the modern world of commerce and business

In fact, many cases never see a Judge, let alone a stern faced Judge and never ever see Judge John Deed or Judge Rinder.

The Real World

We always say to everybody that court is the last resort because it is not an exact science, so once you’ve made all reasonable attempts to secure payment, it’s time for AVC Debt Recovery to get on the telephone and if we cannot secure the monies via an agreement then we send your ‘Letter Before Action’, or LBA to the person owing you money.  The purpose of the LBA is two fold: one is to tell them you mean business, and two, to give the debtor official notice that legal proceedings will be enacted and .

In some cases the LBA acts to jolt the debtor into paying; therefore extinguishing the need for legal action. If this doesn’t happen, the following four stages will apply:

1: Gathering Information

Top of our list is getting all the information necessary to establish what the claim is and what the chances are of winning, and making sure that there is no flaws in the case for you. This includes, all emails, communications  along with the debtors details  Once we have that then we advise clients on putting together the Particulars of Claim. This is a brief summary of what is owed, why it is owed and details of any statutory fees, reasonable administration charges under the 2013 late Payment legislation, interest and court fees that are added to the debt.

2: Sending your Claim

Once this is done an N1 claim form will be filled in and will be sent online to the Money Claim Online and AVC Debt Recovery will ensure that the Acknowledgment of Service is filed.

Stage 3: Logging your claim

Claim data is then entered into the Court Service computer system. At this point the case is allocated a claim number, which is a unique reference that identifies the case. The N1 claim form is then stamped by the Court and sent direct to the debtor, who has limited time to respond.

4: Wait and see

If the debtor doesn’t respond to the N1 claim form within 14 days, then a request for Judgment can be made in the case. This is known as ‘Default Judgment’, and will be entered irrespective of the merits, or otherwise, of your case. At this point enforcement action to recover the debt may begin. If there is a response then the Court system is not the fastest so there is often a lull in the proceedings. However, once the claim number is lodged the case will be seen by a Judge and it will be heard. It could be that the Judge orders mediation.

What if the claim is defended by the debtor?

Of course, the debtor will have the opportunity to file a defence and defend your claim if they so wish. At this point many undisputed debts suddenly become disputed, but this should not worry anybody. The right to a hearing is enshrined in law so the chances are that the case could end up in front of a Judge. However, on average only 16% of cases are defended, with only 3% ever reaching trial. That gives you a very good chance of achieving success without even having to set foot in a court room.

In the unlikely event that your case does go to trial, you would be expected to attend  either as a litigant in person (with representation) or sending a solicitor, but that is added cost.

Upon attendance you will find the court to be a very different place to the one you might have imagined. That’s because today’s courts are convened in modern office buildings and are presided over by Judges who try to speak in plain English and stop to explain as often as possible rather than talking the language of the legal world.  Any Judge will listen carefully to both sides before making and explaining a judgment based on evidence and the law.

Of course, sometimes the law is an ass and you always stand the chance of losing, but if your case is sound and you are owed the monies then the final legal process is painless and AVC Debt Recovery make it easy for you.

As you can see, making a legal claim is not as set out on the TV and films and is actually quite a mundane process that is designed to enable us to you give you maximum return with minimum stress. This means you have every reason to feel comfortable and confident in using AVC Debt Recovery on  a no win no fee basis to pursue the monies you are owed. All you pay are any court fees and disbursements you request.

AVC Debt Recovery

More Top Tips on Avoiding Bad debts

Following on from our 8 tips on reducing your risk to bad debt here are our top 8 tips on being assertive with late payers.

Cash is the lifeblood of all businesses.

To paraphrase Oscar Wilde

“When I was first in business I thought that money was the most important thing in business; now that I am older in business I know that it is.”     

 “Money is like a sixth sense – and you can’t make use of the other five without it.” – William Somerset Maugham

“Always borrow money from a pessimist, he doesn’t expect to be paid back.” 

Of course you are in business so you are not a pessimist and expect to be paid for agreements made and works enacted.

You can run a business without profit, but you cannot run it without cash (money).

It is no use having a full order book and great clients offering you more work if they do not pay and preclude you from keeping your cash flow positive.

It is no use to you having other people’s money sitting in their account after you have provided goods and /or services, and it is not useful for you and your business if you have to spend your valuable time chasing your customers for the cash that you are entitled to. Although no one thing can guarantee success, our experience has shown that following basic steps can improve your cash-flow, reduce your debtor days and minimise the likelihood of bad debt.

1/ Make sure your customers know you expect and want to be paid on time. Set that out in your Ts & Cs. Fail to do this and you potentially invite slow payers. If you went into a restaurant and stated you were not going to pay for your meal for 90 days would you get served?

Do you have a new supplier form that sets out the people who receive and deal with your invoices?

Do you have a process that checks your invoices have arrived on time? Keep the credit control function properly resourced (even if it is just you doing it on a set time and date each week) and align the processes with the people, but have processes that set out contacts and follow up procedures to send out statements and the chasing up of slow payers by email and telephone.

Don’t write letters (unless you attach them to an email) as it just slows down the process and adds cost.

2/ Tell all customers in your Ts & Cs that as part of good and healthy relationship, that all overdue payments will be collected as a debt and action will be taken against slow and non-payers. We sometime seem to worry about asking for monies we are entitled to. It’s not personal but it might become personal when the amount owing starts to put your business under pressure. Being assertive does not make anybody an ogre, but being passive about what is agreed most certainly makes you seem weak, foolish and foolhardy. Make sure part of any sales training includes asking for money and the new supplier payment process.

3/ Set out clearly the cost to the debtor if you go legal in your Ts & Cs. Set out the Late Payment of Commercial Debts (Interest) Act 1998 2013 Regulations. Quote interest, late payment statutory charges and administration charges when you telephone to chase. The law is there for a reason: to ensure cash keeps flowing to those it is due to. Use these costs as a negotiating tool, as you are a nice guy. You don’t want to use the law. Always ask yourself: how relieved are you when you are caught speeding and the police officer states he is not issuing a ticket, but gives you a telling off instead. Explain the reluctance to escalate a £600.00 invoice into £1,000 if they become a debtor under the Late Payment legislation.

4/ Even if you go legal; the process can be stopped any time up to the court and if it does and you win and get a Judgment entered it’s not too late for the debtor to pay and avoid a Judgement following them around for 6 years. A CCJ is not a badge of honour in business and will preclude them credit further down the line. Remind your debtor that if they pay the Judgment amount in full within one month then they can apply to have the Judgment removed from the public register. But if they don’t pay within a month then the Judgment will remain on the public record for six years, even if they subsequently pay up in full. Remind them that the Sheriffs (Can’t Pay We’ll Take it Away; on TV) are unforgiving.

5/ Here at AVC Debt Recovery we use the power of a draft Statutory Demand or winding up order for non disputed debts over £750 against companies (although they often become disputed once the SD is issued), not just a letter. For individuals the amount is £5,000.

6/ Always make a call before issuing any proceedings of any kind (then make judgement call) whether you wish to proceed. Make a call before you issue any claim or instruct a debt recovery company to remind them they agreed to your Ts & Cs and that if they do not pay then costs will increase.  Remind your debtor that this is their last chance to avoid legal proceedings.  Don’t be frightened to use the telephone to issue more reminders to get those waverers who think you might be bluffing to seal the deal before court action.

7/ After any claim is issued ask your debt recovery agent to call and ask the debtor if they want to pay to avoid any Judgment, which will hit their credit rating and go on the public record. Many will take this opportunity. Be prepared to settle at a reasonable level if both parties can sit down. Make sure you instruct to keep all dialogue channels open and remain flexible. Remember 85% of something is better than 100% of nothing and at 85% you might still be making a profit.

8/ Ask your debt recovery agent to ratchet up the demands using both a Letter Before Action (LBA) and a Late Payment Demand (LPD).

We hope you can take something from these tips, but whatever you do check your own Ts &Cs and ensure you are telling people what is acceptable. Here at AVC Debt Recovery we always use the Amazon example. Even though you have already paid the one last thing you must do before they will sell you any product is tick the Ts &Cs acceptance box.

Handling a Dispute: Business Briefing

Does the business really want to be involved in legal proceedings?

Is it possible to negotiate a settlement?

Practical steps to take when a dispute or potential claim arises.

Handling a dispute: Business Briefing

This Business Briefing sets out the actions a business should take when a dispute or potential dispute arises. It applies to any dispute or incident, whether started by the business or brought against it (for example, a dispute with a trading partner or a prosecution by a regulatory body).

Does the business really want to be involved in legal proceedings?

It is very important to understand what the business is getting involved in. It is almost always better to find a commercial solution to a dispute. Consider:

• The value of the claim, the costs involved and the commercial implications of success or failure. Even if the business wins, it will not recover all of the legal costs it has incurred.
• What the business is trying to achieve from the litigation process.
• The time, cost and management commitment involved, most of which is incurred early on in the process.
• How it will affect ongoing commercial relationships.
• Whether the mere existence of a dispute will create difficulties in bidding for new business or otherwise adversely affect the business’ reputation.
• Whether there is a commercial advantage to the dispute (for example, by showing that the business is serious about trademark infringement).
• What the effect will be for both parties if the dispute is made public.
• Whether the other party will be able to pay up if the business wins.
• All litigation is to some extent speculative (for example, how will the witnesses perform in the witness box?).

Is it possible to negotiate a settlement?

• A business should not consider it a sign of weakness to approach the other side to explore the chances of a settlement. This can be done at any time during the litigation process, even during a trial. Settlement negotiations facilitated by a neutral third party (known as mediation) are increasingly popular.
• Always take advice first to ensure the settlement discussions are conducted on a “without prejudice basis”. This means that anything said about the dispute during the settlement negotiations or in any written settlement offer cannot be used later at the trial. This protection only applies to statements made purely in an attempt to settle the case.
• Consider who should handle any negotiations. It is generally advisable to appoint one person with overall responsibility.
• If an offer is made, the business should consider its present-day value, bearing in mind how long it will take to get to trial and the potential cost of litigation.

Practical steps to take when a dispute or potential claim arises

• Take advice as soon as possible after an incident occurs.
• If the business receives any formal documents requiring a response within a specified time, take legal advice immediately.
• Do not leave everything to the last minute. There are time limits which a business will need to comply with. Ensure the business:

a.knows which time limits apply; and

b.has enough time to comply with them.

• Avoid talking to the other party without having a lawyer present. It is important to avoid saying something that may be used against the business at a later date.
• Do not admit anything or agree to settle without taking advice. If the business is forced into a discussion without legal advice, do not admit anything or agree to settle.
• Limit internal discussions to those with a real “need to know”. However, ensure that anyone within the business with day-to-day contact with the other party is aware that there is a potential dispute.
• Do not communicate with any external party (for example, a trade association) without taking legal advice. Do not send documents relevant to the case to external parties or ask them to send them to the business without taking legal advice.

Do not destroy, delete or amend any relevant documentation

• A business should not destroy, delete or amend any documents or media containing information relevant to the case (for example, notes of conversations, diaries, e-mails, photographs or tapes).
• Suspend any routine destruction process that the business may have in place.
• Ensure everyone with access to information relevant to the case is immediately notified not to destroy it and to be careful when creating new documents.

Be careful when discussing a potential dispute or preparing a report on an incident

Businesses may have to show embarrassing or damaging documents to the other party or the investigating body as part of legal proceedings. Therefore:

• Always consider whether a written document needs to be created.
• Think about what is being recorded and how it would appear if it was read out in court. Take legal advice first if it is likely to contain confidential or sensitive material.
• Never speculate, offer opinions or make critical remarks: simply stick to the facts.
• Remember that e-mails are documents, just like letters.
• Only send the document or e-mail to those who really need to see it.

A business may have to implement improvements or changes in practices following an incident, implicitly showing that previous practice was flawed. Take legal advice to find the best way to do this without prejudicing any possible litigation.

Protected communications

• Communications between a business and its legal advisers do not usually have to be shown to the other side or regulatory body. They are protected by the legal concept of privilege and the lawyer’s general duty of client confidentiality.
• However, some communications are not protected. For example, take legal advice before marking documents “privileged” or “confidential”. Using these terms on a document or copying it to a lawyer does not, in itself, make it privileged or confidential.

•              Privilege and confidentiality can be lost if the privileged or confidential information is distributed or copied too widely. Only circulate it on a real “need to know” basis and never copy it externally without taking legal advice beforehand.

Is the business insured?

Check the business’ insurance policy to see if it is an insured claim. If it may be, notify the insurers immediately and follow their claims procedure, otherwise the insurance claim could be invalidated. The business may need to get the insurance company’s consent before taking any action.

Establishing the case

• Evidence. Locate and preserve any relevant materials as soon as possible.
• Witnesses. Identify anyone who may be relevant to the case and, therefore, may have to give evidence. Are they still employed by the business, if not, can they be traced? Contact the business’ legal advisers immediately if there is any reason why they might not be able or willing to give a statement (for example, if they were dismissed or are ill).
• Other parties. Tell the business’ legal advisers if there is any other party who may be liable or should be involved in the case (for example, was the disputed work sub-contracted?).
• Assets. Inform the business’ legal advisers if the other party may consider disposing of its assets so that it cannot pay if it loses. A business may be able to obtain a court order to secure its claim. Also consider where the other party’s assets are.
• Management time. Keep a record of management time taken by the case.
• Case review. Review how the case is going on a regular basis. Consult all areas of the business that the dispute is likely to have an impact on.

 This his article was written by Yuill + Kyle Debt recovery + Credit control Lawyers, Scotland

Debt Collection Advice For Freelancers

With 15% of the workforce in the UK now self-employed, it’s not just the big businesses that need help with credit control and debt recovery/ collection.

Chasing overdue monies before they become a debt  can be difficult for any business – especially if you are self-employed and the role of credit controller falls into your lap.

How to be your own credit controller

Whether you employ an external bookkeeper to help or not, chasing late payers can be a difficult decision to make when you work for yourself.  Switching from a sales and marketing mind set and relationship with your customers to one where you are pressing your lifeblood and contacts for money can be difficult at the best of times and not a transition many people like to make. 

Whilst it may be uncomfortable to put on the debt recovery hat, it shouldn’t stop you from doing it.  Prompt payment of your invoices is essential if you are to survive in your business.

Set clear payment terms up front

The key lies in setting the right terms down from the start as this can help you avoid cash flow problems, client relationship breakdowns, and awkward telephone calls in the future. We always say that onl;y focusing on the sale and forgetting to ask how and when you are going to get paid may be storing up issues at the outset.

If you work in the service industry, it’s may be prudent to ask for part payment or deposits up front to safeguard yourself against any payment problems down the line.  Basic credit checks may also be wise. Sometimes asking for payment in advance for products is not an insult. As a small business, your prospective customers may push against any payment terms and try to negotiate with you, but always remember how much harder you may need to work to make up for goods or ser4vices sold and not paid for.  Remain strong in your conviction and remember that a promise of business is only worth it if you get paid for your work on time.

Be clear about your payment terms when you establish new relationships and set those terms out clearly in quotes, contracts and terms and conditions. That way no ambiguities will exist and disputes will be reduced.

Don’t wait to chase for overdue invoices

If you do run into problems with late payers, you don’t need to go in hard straight away.  Get on the phone and politely ask the person responsible when you can expect payment.  Don’t leave the call without your client telling you what day they will be paying you and by which payment method.

If the problem escalates and you suspect your customer has financial problems, it is worth speaking to a professional debt recovery agency. The earlier you act against a later payer the less chance you have of that later payer becoming a bad debt. . Faster action improves your chances of being able to recover monies. Get yourself to the front of the queue and persistence often precludes the debtor using the cash elsewhere.

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To find out more about our professional debt recovery and credit control model and claim your Free debt recovery consultation contact us at AVC Debt Recovery.

Late Payment Law

The late Payment of Commercial Debts (Interest ) Act 1998 is an Act of the United Kingdom Parliament enabling businesses to charge other business customers interest on overdue accounts and to obtain compensation and is there for all businesses. The Act extends to England, Scotland and Northern Ireland. It can be used to recover debts without souring existing business arrangements. Many businesses that use the late payment law still maintain good relationships with their customers and continue to trade with them. By failing to utilise the late payment law, it could be costing your business thousands of pounds in lost compensation, interest and costs.

How Debt Recovery and Debt Collection Works

Your idea of a business debt collector?

Mention the words debt recovery or debt collection to most people and they immediately get a vision of a burly tattooed bloke with a crew cut, limited vocabulary and baseball bat. The reality is far removed from this.

While there may be unfortunate times when your business needs to employee the services of a bailiff or sheriff (who may or may not look like your mental picture because most of them are very polite), there’s a long process to go through before they can just turn up on your debtor’s doorstep to take away his belongings including car and computers. In fact the law is quite specific about what can and can’t be taken.

When you engage the services of a professional debt recovery business like AVC Debt Recovery using our “no win no fee or Fixed Fee deliverable, there is a process to follow, and this process happily gives your debtor many opportunities to change their mind and settle your unpaid invoice.

Attempts to Contact

The first thing to do with a debt is to contact the company that owes you money and find out if there’s a reason why they have not paid. Perhaps they claim that they didn’t receive your invoice, or perhaps your invoice was incorrect and is now sitting in the pending file. Perhaps there is a genuine error and in some cases people actually have not chased their invoices and a telephone call solves the issue. Perhaps there is a dispute that both parties have put to one side and forgot about. While sometimes there are genuine reasons perhaps they are just excuses to avoid paying, The best scenario in collecting monies is prompt credit control procedure that enable a quick and easy resolution.

Payment Plans

However, if there is a late payment that is not easily resolved then action is required. If a company says that they are in financial difficulty or can’t pay you, then the next step is to see if you can agree a payment plan for the debt. Here, the debtor commits to pay the debt in instalments over an agreed length of time and in agreed instalments.

It’s important to at least attempt to reach a compromise with the debtor because if you do end up in court, judges will look more kindly on your side of the argument when they can see that you have tried to act in a constructive way to settle the dispute without taking up expensive court time.

Final Warning before Action

If you can’t agree a payment plan, or the debtor is unresponsive, then the last step before going to court is to issue a final demand. This communication will be sent by both email and by signature required mail.

Here you issue a deadline after which if the debtor has not paid in full you will state you will commence legal proceedings to recover your debt. Before issuing such a demand it is important that you are absolutely committed to following through. It's not good practice to issue threats and not act on them, and doing so could be interpreted as harassment.

County Court Judgement

If the debtor does not respond to your final demand or they do but you can’t agree a payment schedule, then you have no further options except to take them to court. The process of taking a debtor to court can last many months and winning is not an exact science, but if you have  a case you will win and obtain judgement against the debtor..

Court Judgement-backed Payment Plan

Judges often manage outcomes by imposing a payment plan on your debtor, especially if they ask for one. This is not ideal, but with a judgement backed payment plan you’re in a much stronger position than a payment plan agreed between you and the debtor. If the debtor fails to pay you at the agreed time you can apply to the court for a warrant for bailiffs to seize property and goods to the value of your debt. It is only at this point as a complete last resort that the professionals we all have the perception of and see on the TV get involved. However, be aware that clever debtors can frustrate the system.

Why use a Debt Recovery/Collection Agency?

Of course it’s possible to do all of this yourself, but you are a professional at your business and what you do will be a more important and constructive use of your time. The big advantage of involving a professional debt recovery agency is that they can apply all facets of Late Payment legislation and communicate to the debtor to see if a constructive payment plan can be instigated prior to any court action. It also sends a clear message to the debtor that things have got serious and it’s time to pay up. If the debtor company is financially stressed, then they’re probably juggling who gets paid at the end of each month. By elevating your late invoice and involving a specialist in business debt recovery you get your monies to the front of the queue. It’s like being a celebrity at Wimbledon tennis. We make sure you are not queuing on Wimbledon Common, we get you to the front to get in (paid).  We have the know-how to see the process right through to court (not the centre cout), but before that we have placed your invoice right up to the top of the list.

Many companies pay up very quickly once we contact them and we aim to collect all outstanding monies well before court proceedings are necessary. Sometimes a writ spurs the debtor into action to pay

You have a right to add a statutory charge, interest at 8% above the Bank of England base rate and recovery costs to a late payment from a business customer. This means that, if you choose to, we can add our fees to the debt , so the late payer pays our fees and our service ends up costing you nothing, or you can use a fixed fee service where we take a percentage of the debt, so you get 85% of your monies which, in 9 times out of 10, the client stays with you and becomes a more diligent payer.

For more information visit http://www.avcdebtrecovery.com

Who’s Making Sure You're Getting Paid on Time?

Benefits of credit control

"It Doesn't Count 'til it's in the Account"

For a small number of people paying on time is part of their ethos, but unfortunately for most their human nature is that they will not pay you until they are reminded to.

Many business people find asking customers for money a tricky and often uncomfortable conversation to have, but the longer the debt remains unpaid the more difficult it becomes to collect and the more at risk you are of a later payer becoming a bad debt..

With bad debt and cash flow issues cited as two of the main reasons most small businesses fail it is vital that someone in your business is tasked to keeping an eye on your outstanding monies and guarding your cash flow.

What is Credit Control?

Credit Control is the system used by a business to make certain that it gives credit only to customers who are able to pay, and that customers pay on time. It is a critical part of a well-managed business that will help minimise bad debts and improve the cash flow in your business. Improving the management of your debtor book can release important cash flow into your business and help avoid the need to pay interest on overdrafts, offer discounts or use expensive invoice discounting. In any business cash is still king. You can run  a business without profits, but you cannot run  a business without cash.  Having cash to make payments on time will improve your own credit terms with suppliers. In other words, managing your debtor book can help keep those juggled balls in the air.

Credit control requires specialist skills together with the right systems and processes in place at the business and the right processes or systems does not mean expensive software it often involves simple processes that start with a basic supplier form that clearly sets out contact names and payment days and  the filling in of this form by any potential customer often tell s you a lot about whether they will be a late payer. It’s not just about collecting cash from late paying customers, good credit control is based on building relationships with your customers and creating a rapport with them. Calling a customer to chase money can often be a difficult conversation, especially if you omitted to clearly set out your terms of business form the outset. Also, if you’re not careful you could easily upset them, so it's always best to be polite and professional and to remove the emotional side of things from the call.

Credit management is also about assessing the risk of potential customers from day one, before the sale is even made and deciding how much credit (if any) you are comfortable extending. If you trade with customers over an extended period, you need to keep your credit ratings current and stay on the lookout for the signs of a business in financial distress so you can adjust credit limits limit your risk of getting caught out by a customer going into administration owing you money.

Ensuring that have the requisite knowledge of your customer’s processes and approval systems when it comes to invoicing is also a crucial factor, especially when dealing with larger companies who often omit to tell you that invoice is incorrectly submitted will be filed in a pending tray. It is tough enough getting paid on time without realising 35 days after the invoice is raised that it is wrong and needs re-submitting. With many companies only having one payment run a month nowadays this could result in your business having to wait over 60 days before you receive payment, which could be damaging if the cash flow from that invoice is being relied upon. 

Reduce the potential opportunities for people to pay you late, so check that your invoice is up to scratch and meets all legal requirements. Customers will not let you know if there is a problem with your invoice – it will just sit on their disputed pile so it's really important to get it right first time. If you are sending an invoice out to a new customer then it is worth giving them a call a few days after you sent it just to check it has been received.

Dealing with Overdue Invoices

One of the many challenges small businesses face is tactfully, but firmly, securing payment from customers who have disputed an invoice. When this happens, however tempting it might be to try to avoid conflicts, you must not ignore the problem of a late disputed invoice. It certainly won't go away on its own and it's far better to tackle the issue quickly before positions become entrenched.

If an invoice does become late, the Late Payment 2013 regulations give you the statutory right to add late payment interest and compensation charges to the debt. When all reasonable efforts have failed you should escalate the invoice quickly, for example by passing it to a business debt recovery service such as AVC Debt Recovery,  which will preclude you from having to listen to yet another excuse for paying late. The cost of the service can be added to the debt as a compensation charge, so in effect your late payer ends up paying for the collection service. It's important that the collection service has teeth and can see the process through to a County Court Judgement (CCJ). This way the debtor knows it's time to pay and most will do so long before such measures are necessary.

Outsourced Credit Control

Few small and medium sized businesses can afford a specialist credit controller and often it is down to an administrator or even the owner to deal with it. This takes up their valuable time when they should be doing what they do best – in most cases that’s winning new business. Many businesses do not realise that this kind service exists let alone that it can be bought on an outsourced basis.

Outsourcing gives you the option of using the service as and when the need arises, therefore it reduces the need of employing specialist staff who you may not have a full time position for.

Why not go and take a look at your debtor book – you will be surprised at how much is sitting in the overdue column – remember that’s your cash and it should be sitting in your bank account!

If you would like further information or advice on managing your debtor books, or to know how AVC Debt Recovery can benefit your company cash flow please contact us.

http://www.avcdebtrecovery.com

What to Look for in Business Debt Recovery/ Business Debt Collection

& Choosing a Debt Recovery/ Debt Collection Service

You have delivered work OTIF and your patience has reached breaking point. The customer who agreed payment terms has used every excuse in the book (and sometime some that aren’t even in there), not to pay you and played for time at every turn.

Therefore enough is enough. It is important you get your money, but you have to focus on running the rest of your business too. Time to turn to a debt recovery/debt collector for help, but what should you be looking for?

Can’t Pay? We’ll Take it Away.

We have all seen the TV shows featuring large gentlemen intimidating recalcitrant payers into coughing up, the popular image of a debt collector is a large necked man in a suit. We also remember Vinnie Jones in Lock Stock and Two Smoking barrels. This may be the kind of approach some businesses are looking for, but if you value your reputation and brand you are likely to be looking for a more professional approach that approaches debt recovery from the legal standpoint.

The ideal scenario is to get paid whilst continuing to do business with the customer, so sometimes credit control and nudging the customer into the position of payment is the way forward. Whatever happens you must be smart and realistic.

Employing a debt recovery company need not destroy a business relationship, in fact bringing in a third party can remove emotional baggage from the negotiation and leave relationships in better shape after the issue has been resolved.

The Vinnie Jones option is not for business.

A company that employs large necked gentleman with tattoos is not either.

 A credit control company that specialises in business debt collection can combine a professional approach with a less aggressive initial contact, quickly ramping up the pressure on the debtor to legal action only if the debtor does not respond positively.

A debt recovery solution that is Free at point of engagement is also an option now thanks to UK government legislation.

Alignment of Interests

Ask yourself what the alignment is with your debt to the ethos of the collection process.

Are you prepared to pay a percentage of  the debt to the collector or do you want all the invoiced monies? If you want the former then you need to look at an upfront  fixed fee, the latter “No win-No fee”.

Are all interests lined up in the recovery process?

Does the debt recovery company tell you your chances of recovering the monies?

Many legal firms will send an automated threatening legal letter to your debtor for a very small fee. But why would they do this? Clearly its because they hope the debtor ignores it and you have to end up spending money with them taking the debtor through the courts. It’s a simple loss leader for them. The letters have impressive-sounding titles like ‘Letter Before Action’(LBA), but the more it’s used (and there are more and more of legal firms offering this service), the more debtors are getting wise to the idea that the letter costs only a few quid and the threat is empty.

Some debt collection companies charge an upfront fee to work on your behalf or they charge you a percentage of recovered monies.  Here the fee of between 10% -20% come out of your monies so you receive 80% - 90% of your monies.

But you can avoid these and instead choose a business that backs itself with a fee that is only charged on successful recovery of your debt . This is called “No win- No fee” debt recovery from a company who use the Late Payment of Commercial Debts (Interest) Act 1998 (2013 Regulations) which enables them to earn money from the addition of fees under late payment legislation. Ultimately most debtors pursued under this methodology do not say, but it is the most effective methodology of debt recovery as the debt recovery company are highly motivated to recover the monies.

All companies who offer “No win- No fee” also operate fixed fee, but many legal firms do not operate “No win – No fee”.

Alignment of the aims is key to choosing your partner in debt recovery as then you know that the company you have chosen has exactly the same interests as you, namely to bring in the most money in the quickest possible time.

Check also that the debt collection company will give you the option to add late payment interest and their fees to the debt to be collected. You now have a statutory right to charge our debtor for these. If these additional sums are successfully collected, the debtor will in effect be paying the debt collector and you’ll be getting the service for nothing.

The Big Stick

It’s important to check that the debt collection service you employ has the capability of taking the case all the way to court in the small number of situations that require it. The reason for this is that the debtor needs to know, deep down, that this has become serious and they really need to deal with your outstanding payment rather than go to court and accrue more cost.

US President Theodore Roosevelt said of foreign policy ‘Speak softly and carry a big stick’.  If the polite insistence of your debt collection company is backed up with the credible threat of a court action, then you’re far more likely to get paid quickly and not need to end up in court at all. Check your debt collector has the ability to take your debtor to small claims court, and perhaps more importantly that their website makes it clear to your debtors that this is the case. If the debt recovery company is of the Al Capone type then they will use his phrase on how he got his own way: “… a few kind words and a loaded gun”.

Making the Best

It may be that there are serious financial problems with the debtor company and that you feel that anything you can get out before the train crashes is a bonus.  A good debt recovery company will enact credit checks and advise on the chances of a payment. Where it become a case of  “impossible to pay " rather than "won’t pay” then a good debt recovery company will not take your money or take the job on. However, when push comes to shove a good debt recovery agency will enable payment. Where financial issues are the case, it is often best if your debt collector can help you agree a payment plan where the debtor pays you in instalments over a few months, with the aim of getting paid ahead of other creditors. Check your debt collection company will negotiate for you rather than just insisting on full payment immediately and driving you into a costly and ultimately fruitless court case. Remember it is not a win if the debtor goes pop and has no assets to cover your debt. It isn’t a win till it’s in (your account). That and the fat lady singing of course.

Here at AVC Debt Recovery we work closely to align the needs of our clients to ensure they receive their monies as fast as possible offering a Free debt recovery service under Late Payment legislation and fixed fee work.

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Do your contracts comply with the new rules on late payment?

The Late Payment of Commercial Debts Regulations 2013 apply to all contracts entered into on or after 16 March 2013. 

AVC Debt Recovery sets out those areas you may wish to look at in your agreements relating to your payment terms.

The original legislation is The Late Payment of Commercial Debts (Interest) Act 1998, which is often referred to.

The aim of the Regulations is to encourage prompt payment of invoices - a continuing issue that may become a problem for all businesses. Recently the government stated that £34.2bn was outstanding as late payments and often larger businesses paying small suppliers are at fault. Late payment affects everybody, but particularly small suppliers suffering cashflow problems, particularly so in the current climate where margins seem to be shrinking.

Time limits for payment

There are now time limits for payment, depending on who you are contracting with:

Public authorities: 30 days unless the contract stipulates a shorter period for payment.  This period runs from the later of the date of the invoice or the receipt, acceptance (or, where the contract provides for it, verification) of the goods or services.

Private businesses: 30 days unless the contract contains an express clause on payment.   Any express clause may allow up to 60 days from the later of the date of the invoice or receipt, acceptance (or, where the contract provides for it, verification) of the goods or services. 

It is possible to agree more than 60 days provided the agreement is in writing and such terms are not “grossly unfair”.

“Grossly unfair” means anything which, in the circumstances, is a gross deviation from good commercial practice and contrary to good faith and fair dealing.  As this is a new concept under English law it will be interesting to see how the courts apply this in practice.

What if payment is late?

Under the Regulations the creditor can charge the following:

interest at a rate of 8% over the Bank of England base rate (or such other rate as is agreed);

a fixed statutory charge or compensation charge of £40, £70 or £100 depending on the size of the outstanding debt; and

any other reasonable recovery costs incurred.

What should I do about this?

We recommend that:

you review your standard terms of sale and purchase or any agreements or terms and conditions to see whether any amendments are needed;

When reviewing any new contracts, you enact simple checks and keep a look out for any clauses or terms which may not be in line of the new rules.

Here at AVC Debt Recovery we offer a full service including contract checking, credit control and invoice chasing at fixed cost as well as full recovery services tailoring the best practice to enable clients to get paid with a view to retaining the customer.

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What do you do, when someone threatens your business with litigation?

Higher than average levels of optimism and boundless drive are the fuel behind many business entrepreneurs but, they’re not always water tight with their business controls, and a lack of planning can land you in hot water.

Being taken to court is not a pleasant experience for anyone, but for a small business legal proceedings can be disastrous and place an inordinate strain on your resources and entrepreneurs are often at risk of litigation due to business controls not always being in place and sometimes, being ignored.

 Litigation (or even the threat of it) is bad news with time, money, reputation and uncertainty eating away at the core of your business and in the worst case scenarios, potentially ruining it.

 So what do you do when someone threatens you with court action?

 Proactively mitigating your risk is a good start!

Check your contract or any agreement to see if what is being stated to you is correct and there is a dispute.

 If your business is threatened with legal action, your priority should be to minimize the impact. Sometimes the best course of action for your business may not be your preferred outcome, particularly if emotion and price get involved.  So you first need to identify and evaluate exactly what’s happening, the alternatives and base decisions on common commercial sense and reason, rather than emotion.

Don’t delay in getting advice

 Whilst it’s tempting to ignore a demand or claim letter, don’t ignore a threat of legal proceedings in the hope that the problem will just go away - though you can certainly try to test out whether the other party is just using the threat of litigation, to bully you into submission.   A familiar tactic faced by many small business owners. 

In any event, even if you fervently believe that the threat of legal action is without any foundation, the chances are that you will end up pay more in time & cash if you don’t seek some immediate legal guidance to understand your position.  Knowledge is power etc.

Consider the strength of your position asap and if necessary, have an initial chat with someone experienced in this type of dispute resolution. 

 Not only should you receive sensible commercial advice, but you can also obtain an impartial perspective on what might by that stage, have become personal and confrontational.

Don’t Forget ….Your business comes first

There is a good chance that you’ll avoid formal proceedings, particularly if you nip any problem in the bud.

 Why not use an old fashioned strategy to begin with …. talking!   Most conflict can be resolved by communication.

 If you can’t amicably sort out your issues and reach some common ground, explore more formal avenues of alternative dispute resolution – including mediation.

 Settling out of court is usually quicker and cost-effective than going to court. In the UK, judges expect parties to have undergone some attempt at resolution before reaching court – and there are adverse cost consequences for not doing so.

  If you are unable to avoid court

 Once a dispute has reached court, there are 3 possible outcomes;

1. Still do what you can to reach an agreement with the other party otherwise,
   1. the court will either dismiss the claim or
   2. make a judgement.