Setfords Solicitors answers your legal problems
March 20, 2012
EACH month Setfords Solicitors in Guildford answers your legal issues.
How can my small business recover money owed by clients? I manage a small business and have a few clients, who have not been paying their invoices.
I have sent numerous emails and letters demanding payment, but it’s been over three months now and I don’t seem to be getting anywhere.
The debt is only £1,000, so I’m wondering if it’s worth pursuing them for such a small amount. I don’t have a great deal of money to afford court and legal costs. What would you suggest I do?
It’s always worth pursuing any unpaid invoices you have as a business, no matter the amount of the invoice. You may be concerned about maintaining good working relationships with your clients, but by allowing an invoice to remain unpaid for so long you are damaging the businesses cash flow.
Deciding how to pursue your unpaid invoices is what you need to keep in mind. Try calling your client. You’re much more likely to make an impact over the phone than through letters or emails, whilst it is also easier to recognise when they are stretching the truth.
If payment is still not received, or you feel like their reasons for non-payment are unreasonable, there are other options before taking court action.
There are ‘no-win no fee’ schemes available to help you recover your undisputed debts. If your solicitor is successful in recovering your unpaid invoices, they will charge you a percentage of the sum recovered. This percentage will be dependent on the age of the invoice.
Alternatively, you can prepare a Letter before Action that signifies your intent to enter court proceedings if the invoice remains unpaid after a set period, which is typically 14 days.
If this course of action still fails to recover payment you will have to consider whether or not you are prepared to issue court proceedings against your debtor. Court fees are recoverable from the debtor, but you will have to be prepared for this outlay before proceedings are issued and/or if the debtor does not settle the claim.
Finally, review your credit control procedures. This is an important element of running a business; a good credit control procedure decreases the likelihood of bad debt and ensures a smooth and clear process for recovery of outstanding invoices. Your terms and conditions should set out your payment terms including interest charges.
If you have been affected by similar issues, more information and free advice is available at www.setfords.co.uk.