Debt recovery

How to Recover Debt From Companies or Individuals

How to Recover Debt From Companies or Individuals 2560 1440 Positive-Collections

It can be incredibly frustrating when your customers, clients or tenants do not pay for the products or services that you have provided for them. Not only does this hurt your cashflow and profits but it can also consume a huge amount of time and resources for you or your employees. In this article we will explain the options available for you to recover monies that are owed.

Send Reminders

The first step is to contact the debtor to remind them of the outstanding balance that they owe to you. This can be done by sending letters, emails and/or phone calls and it’s important to keep records of all the correspondence because they may be required as evidence further down the line.

You can also write a more formal letter which is called a Letter Before Action (LBA) warning. In this letter you should clearly state how much money is owed, when you expect is to be paid and what action you will take if they still do not pay.

If you are still unsuccessful then you can take more aggressive actions as follows:

Controlled Goods Agreement

A controlled goods agreement allows for a bailiff company to recover the debt on behalf of the creditor by taking possession of assets, such as equipment and vehicles, which can then be sold at auction.

County Court Proceedings

If your debt is under £200,000, you can apply for court action through the Money Claim Online service or if the amount owed is under £10,000 it can be made through the small claims track of the County Court.

Once a claim has been issued, the Court will serve it on the debtor, who must then acknowledge the claim within 14 days and respond fully within 28 days.

Taking a debtor to court can be costly and time consuming, so you should calculate if the value of the debt is enough to justify the potential expense.

Statutory Demand

statutory demand is a formal demand for payment which gives the debtor 21 days to pay.  If your debtor does not agree to your statutory demand within 21 days you can start bankruptcy proceedings against any individuals or apply for a winding up petition for a commercial client.

Winding-Up Petition

If a commercial client is unable to pay a debt of more than £750, you can petition the court for a winding-up order. If successful, a winding-up order will be issued by the court and this will result in the company assets being liquidated and the business will be removed from the Companies House register.

Bankruptcy Petition

If you are owed £5,000 or more by an individual, then you can present a bankruptcy petition to the Court. If the court approves the bankruptcy petition, then the debtor’s assets can be taken and sold to pay their debts.

Hire a Debt Recovery Agency

The good news it that there are a number of options for you to be able to collect debt which is owed to you from individuals or other businesses. The bad news is that this can be confusing and take a lot of time. At Positive Collections we can handle this for you and in most cases we can recover your debt before any legal action is required. If you would like to find out more about how we can help you then please get in touch and speak to one of our expert advisors.

8 ways to get your invoices paid on time

8 ways to get your invoices paid on time 2560 1707 Positive-Collections

Research by pay.uk (which runs the Bacs Direct Credit and Direct Debit payment services) shows that UK SMEs are paying a total of £4.4 billion a year to collect money they are owed from late invoices, with 22% of those spending more than £500 a month chasing payments.

In this article we are going to share 8 top tips for getting your invoices paid on time which will help with your cash flow and reduce costs to your business.

  1. Send invoices to your client as soon as possible

Why delay the process yourself? The quicker you send the invoice to your client, the sooner that they are likely to pay. It also means that the product or service that you have provided for them is fresher in their mind which should help to speed up the process.

Also, if you take a few weeks to send an invoice to your client, you are sending them a message that you are not in a rush for the payment.

  1. Agree clear payment terms up front

Don’t wait until you send the invoice to outline when you expect to be paid, because this might surprise your client and cause delays. Let them know the payment terms in advance before you start the work or provide them with a product. This should be in writing in the form of a quote or contract and ask them to confirm that they are happy with these terms before proceeding.

  1. Send the invoice to the right person

Do you know who is responsible for paying the invoice because it might be different to the person you have been liaising with. It’s worth asking the question in advance and getting the name, email address and phone number of the person or department that pays the bills so you can send them the invoice directly. This saves it being sat idle in someone’s inbox for days or weeks before they forward it on to the right place.

  1. Make the payment process easy

Make it as easy as possible for your client to pay the invoice by ensuring it well presented, includes your bank details and possibly having multiple ways to pay. This could include taking credit card payments, PayPal or even offering instalment plans.

  1. Penalties for late payments

Charging interest for late payments is a legal entitlement for all businesses in the UK. You don’t necessarily have to enforce this, but if you include it in your payment terms it can be a powerful tool for encouraging your clients to pay on time. If you’d like to find out more about how to do this, we have written an article with more details which you can find here:

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  1. Offer a discount for early payments

Financial incentives can be a powerful tool, as discussed in the previous tip, but this time we are using a ‘carrot’ rather than a ‘stick’ which can come across as much more warm and friendly. Even just a small discount of 5% to pay within 7 days can really encourage your client to get the payment made quickly.

  1. Synchronise with payment runs

Many larger businesses will have a certain day of the month that they pay their invoices. If you don’t know when this occurs and you miss it by a couple of days, then it could be a few weeks before you get paid. Why not ask your client when they make their monthly payments so you know when is the best time is to submit your invoice.

  1. Send a reminder

Sometimes your client might have just forgotten to make the payment, so a simple email reminder a few days before it is due will be enough to prompt them. But make sure that the email you send it polite and professional.

We hope that these tips have been useful for you however there may still be occasions when you need extra help collecting late payments. At Positive Collections we have a strong history and proven track record of recovering monies using professional, legal and ethical approaches and always strive to reach a fair outcome for all parties. If you’d like to find out more, please get in touch and speak to one of our friendly and professional experts.