A survey has found that 68% of businesses in the North West have been hit by late payment problems in the first half of 2011. The Britain in Business survey, conducted by Lloyds TSB, found that the number of companies in the region facing problems with late payments was 5% higher than the national average of 63% and overall, a third of North West businesses were struggling with ‘cash flow’ problems.
Whilst there is often a genuine reason for the late payment of invoices, the recession has undoubtedly had an impact on the speed in which payments are being made. Staying on top of finances and chasing debt in a timely and structured manner can have a significant impact to the overall health of a business. As such, business owners need to keep a close eye on payment receipts, and act quickly where any overdue debtors are concerned.
As a debt recovery solicitor, I regularly advise businesses on the best way forward to recover payments owed to them. The first port of call when chasing debts is to try and speak with your debtor. Reaching an agreement not only secures payment, but also maintains the relationship and future business. When negotiating payments, ensure that you keep copies of all emails, letters and details of telephone calls as these may be required if you need to pursue further action.
It is also important know your Terms and Conditions of business; the timelines in which payment should be made and the interest to which you are entitled where invoices remain unpaid. If you are experiencing recurrent difficulties in the collection of payments, it may be that you should review your Terms and Conditions, and consider tightening payment terms or applying interest where invoices are outstanding.
If you are unsuccessful in recovering your debts, a formal letter from your solicitor demanding payment is often successful. If all other avenues have failed, you can pursue the matter further by way of court proceedings or issuing a winding-up petition / bankruptcy proceedings.
When taking further action, always try to maximise what you can recover. Creditors are entitled to recover compensation (up to Â£100) arising out of late payment, together with interest in accordance with the standard terms and conditions of business. Alternatively, you can recover interest pursuant to The Late Payment of Commercial Debts (Interest) Act 1998 at the current annual rate of 8.5%.
For further help and advice in relation to debt recovery, please do not hesitate to contact me.