As the restrictions continue to be lifted and a lot of businesses are moving towards getting back to normal, the impact of COVID-19 has been felt across all types of businesses and sectors. Whilst some companies have continued to operate as normal, many have been shut down and unable to operate.
Pandemic or not, one of the most fundamental issues to all companies is cash flow. We are frequently being asked whether it is appropriate for companies to be collecting their debts in the normal way, as reviewing aged debts and collecting overdue monies have become a top priority for many businesses. Whilst it will sadly be the case that some will be unable to repay their debts in full at present, it is vital for business owners to be taking the steps to shield and preserve their own cash flow now, so should not be discouraged from acting as they normally would in relation to debt recovery. If you have provided goods or a service then it is your right to be duly compensated as per your terms of agreement.
Check your Terms and Conditions
Ensure that the goods or services you are providing are governed by your terms and conditions. It is advisable that your terms & conditions set out when payment of your invoices fall due and the interest rate that you are entitled to charge on the balance of any outstanding invoices.
Communication is Key
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. It can also help you to assess which debtors are genuinely facing financial distress and those who may simply be refusing to pay.
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.
Before beginning any formal proceedings, you should always first evaluate the financial position of the debtor. Doing this will allow you to establish whether the debt is ultimately worth chasing, ensuring that the debtor has either the funds or assets to enable you to successfully enforce any judgment.
Taking Formal Action
In the event that it is necessary for you to consider taking formal action, there are a number of avenues for you to consider, including insolvency proceedings and county court proceedings. Depending on the value of the debt, once formal action is commenced, the debtor may become liable for any legal costs you incur. Prior to embarking upon formal action, speak with a specialist solicitor who will advise you upon the most appropriate, cost effective course of action.
Where you are unsure as to how to pursue business debts during the current climate, you should contact a solicitor who specialises in debt recovery. To speak to one of our specialist team regarding the options available to you contact Farleys on 0845 287 0939, or drop us an email.