Recent research carried out by the Association of Business Recovery Professionals reported that 134,000 UK businesses were struggling to pay their debts as they fell due. 137,000 businesses had to negotiate payment terms with creditors.
Although the economy is showing signs of improvement, according to debt recovery expert Jagdip Bains of Ansons Solicitors, cash flow continues to be a major concern for businesses in the UK.
One of the main causes of cash flow is late payment of invoices. If a company is unable to pay their debts as they fall due then this will result in the debtor being wound up by a creditor or entering into a company voluntary arrangement.
It is important to be disciplined about your credit control procedures to ensure that you are on top of the debtor’s payment list. Remember the saying “he who shouts loudest gets heard”. You must put procedures in place to ensure that you monitor all debts and take action against debtor quickly to avoid either being paid late, which will affect your cash flow, or not paid at all if the debtor becomes insolvent.
To ensure your outstanding invoices are paid, you must ensure that every customer you provide goods or services to has a signed contract in place. If you are offering generous credit terms ensure you have a personal guarantee from a director. Discipline yourself and monitor payment of all the invoices as soon as they become due. Telephone the customer once the invoice is 7 days overdue and follow this with a letter if necessary. Ask the debtor why your invoice has not been paid. If a satisfactory explanation is not given then contact the Ansons dent recovery team and we can send a letter before action, and follow up by legal proceedings if required.
If the debtor is solvent, the threat of legal proceedings usually prompts a response or payment. Legal proceedings can be issued quickly which can result in a county court judgment and enforcement action being taken against the debtor.
On 14th March 2013 the Late Payment of Commercial Debt regulations came into force. This legislation allows businesses to claim interest plus compensation costs between £40 and £100 on outstanding invoices depending on the value of the interest. The regulations allow you to add your debt recovery costs to your claim.
Ansons Solicitors specialises in debt recovery and we offer a personal approach from our offices in Cannock and Lichfield. Should you require expert debt recovery advice please contact Jagdip Bains who is a solicitor in Ansons dispute resolution team on 01543 267 196 or email firstname.lastname@example.org.