Unless you’re running a very large organisation, maintaining a steady cash flow may be critical to your business’ survival. When unpaid invoices mount up, the resources spent chasing delayed payments are diverted from running your operations.
Every business expects to chase the occasional unpaid invoice, but persistent late payers and non-payers can be crippling. We recognise the need to have a fast, effective debt recovery process to protect your business.
The specialist debt recovery team at mfg Solicitors are highly experienced in securing fast results for business clients.
A serious problem
Unpaid invoices are a major headache for SMEs. This summer, when the new Small Business Commissioner started her role focusing on this very issue - around 4 in 10 of Business-to-Business (B2B) invoices for UK businesses were overdue, with 7% of sales written off as bad debts.
If you’re trying to run an efficient business but your requests for invoices to be paid are consistently ignored, your credit control team may need help in taking decisive action. This is where we step in.
What we do
We will consider the terms and conditions of your relationship with the debtor, the amount owed and the circumstances in which the debt has arisen. We can then discuss what swift and effective action we can take, for instance:
Letter Before Action – We will send this to the debtor promptly, setting out the full amount owed, including late payment interest under the Late Payment of Commercial Debts (Interest) Act 1998, and statutory compensation (if due).
A robust, well-crafted Letter Before Action often results in payment outright or an agreement to enter into instalments. It will warn the debtor that you intend to take further legal action if payment is not forthcoming within a specific timeframe (usually 7-14 days in the case of a B2B relationship, or 30 days where the debtor is an individual).
Statutory demand – We may suggest a formal written statutory demand for payments of undisputed debts of at least £750 (£5,000+ in the case of individuals) within 21 days. Where non-payment continues, we may present a winding-up petition (or bankruptcy proceedings for an individual).
Winding up petitions – If a winding up petition is issued against a company, the Court would provide a future date for a court hearing to decide whether a winding up order should be granted and the company liquidated. Following service of the papers on the company, it has limited time to respond / make payment (in particular there is a critical 7-day window) – otherwise we would seek to advertise the petition within The Gazette and as a consequence, its bank accounts are at risk of being frozen and the petition moving forward to final determination at the listed hearing.
Bankruptcy petitions – We can initiate bankruptcy proceedings against a sole trader (or members of a partnership) who fail to pay outstanding debts to you.
Court proceedings – We may advise issuing court proceedings as an alternative to a statutory demand. This may be appropriate if the debtor disputes the debt or has not been communicative. Depending on the precise contractual position based on the facts at hand, the claim would be for the debt itself, interest on the debt, court fees, legal costs and any statutory compensation due (where applicable).
In circumstances where the defendant files a defence, we would look to assess the position and provide you with appropriate advice as to moving forward. We may be able to obtain summary judgment with the evidence you’re able to provide.
Enforcement – If we secure a court judgment in your favour, there is no guarantee payment will then straightforwardly be made; and we may need to take steps to enforce it. Several options will be considered, such as obtaining a warrant or indeed, a writ, of execution and instructing bailiffs, seeking a charging order and order for sale and/or an attachment of earnings order.
The preferred option will very much depend on whether the defendant is solvent and what assets are available. We will take the time to go through the full circumstances with you, consider the debtor’s financial situation and advise on the next steps.
How we can help
Our specialist Commercial Litigation team provides businesses across all sectors with assistance in recovering unpaid debts. For prompt advice, please get in touch with Reuben Grimshaw at reuben.grimshaw@mfgsolicitors.com or Chianna Weaver at Chianna.Weaver@mfgsolicitors.com, or call our offices via 01562 820181.
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