I run my own business and I am struggling with unpaid invoices. What can I do to get paid?

Article

25 March, 2010

Knowing when to take action

The question to be asked in any debt case is "what is the likelihood of getting paid?" An unpaid debt becomes bad when it can no longer be collected.

Before any action is taken a cost/benefit analysis should be carried out to decide whether steps should be taken to pursue the debt or not. If phone calls and letters are having no effect, then further action needs to been taken.

What is the procedure in collecting a debt?

Initially we will send a standard seven day letter before action to the person or company owing the debt requesting payment is made. If this letter fails to resolve the issue we can then start court proceedings and an order will be obtained from court which will allow us to enforce and collect the debt.

There are various enforcement methods available and the most effective will depend on the debtor's circumstances:

  • Instructing bailiffs or sheriffs is a common way to collect unpaid debts from limited companies or sole traders.
  • If details of a third party owing money to the debtor are available or the debtor's bank details are known an application for a Third Party Debt order can be made.
  • If a debtor owns their own property a Charging Order can be applied and money recovered upon the sale of that property.
  • An Attachment of Earnings can be obtained against the debtor if they are employed.

Further information on the debtor to assist in the collection of debt can be obtained by either instructing trace agents or making an application for an oral hearing.

What If the debt becomes disputed?

Occasionally an unpaid invoice can be a signal of an underlying dispute. Should a dispute arise we have a team of experienced litigators who can advise you on the best course action and the costs involved.

Things to bear in mind

A debt collection compensation charge can be added to the debt in addition to late payment interest. The right to claim interest is your decision and it is not compulsory but will assist in legal fees incurred from pursuing the debt. Legal action does not always have to sour the business relationship and often a simple letter from a solicitor can prompt payment.

The Forbes Business Debt Collection team offers a comprehensive, cost-effective service for the swift collection of debts. Each case is treated individually and action will only be taken after close consultation with you.

For assistance in collecting a commercial debt please contact the Business Debt Recovery team at Forbes Solicitors on freephone 0800 689 0831 or by email today.

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