Are you struggling with debtors and need some tips as to how to recover debts? In this article our Debt Recovery expert, Zoe Davis, provides you with some top tips for debt recovery.
Cash flow is key to a successful business. The best way to ensure your cash flow keeps moving and allow for growth of your business is to ensure your creditors pay their invoices promptly as unpaid debts can have a knock on effect and prevent your business from being the most successful it can be.
Here are our top tips for recovering debts quickly and effectively while keeping your clients and customers happy.
1. Send you invoice promptly and remind your debtor of your payment terms when you do so as to encourage them to pay on time.
2. Send a reminder when the deadline to pay has passed, send a reminder promptly to encourage your debtor to pay.
3. Contact the debtor and establish whether there is a genuine reason for non-payment. If this is the case, you may be able to negotiate payment terms. It may also encourage the debtor to prioritise your invoices in the future if you have been understanding.
4. Consider a repayment plan. If you debtor is experiencing financial difficulties, it may be possible to negotiate and instalment plan. At least this way you will get repaid.
5. Inform the debtor you will instruct solicitors. If your negotiation attempts fail, you may need to take further action, however sometimes simply advising you will instruct solicitors can encourage negotiation or settlement.
6. Instruct solicitors to send a Letter of Claim or Letter before action. If your debtor still doesn’t pay, or has no suggestions for negotiation, you can instruct solicitors to send a Letter of Claim advising Court action will proceed if they do not pay. Often this can prompt payment or open channels of negotiation. In addition, a solicitor will often include in the letter the costs consequences of not paying including interest, compensation and legal costs and this can encourage payment.
A letter from a solicitor is often the most effective way to recover debts. However, if your debtor still refuses to pay, it may be necessary to issue Court proceedings.
If you require assistance with debt recovery, we can assist with professionally drafted Letters of claim or letters before action providing easy to understand, clear and detailed advice on the Court proceedings process. If this sounds like something you and your business need assistance with, contact a member of the Dispute Resolution Team at Josiah Hincks Solicitors on 0116 255 1811 or by entering a new enquiry into our website.
You can learn more about our Debt Recovery Team by clicking here.
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