Chasing unpaid debts from your clients will waste your valuable time that could, and should, be spent on running your business. The process will be time consuming, frustrating and stressful, not to mention placing strain on those business relationships.
Our highly respected Debt Recovery team can take the burden of chasing these unpaid debts off of you so you can focus on your business. We take the time to understand the relationship behind the debt and tailor our approach accordingly to maintain the balance between receiving prompt payment and keeping those relationships in tact for the future.
Once we have agreed the right approach for you, the first step in any debt recovery process is to send the debtor a Letter Before Action (LBA). This is a legal requirement under the pre-action protocol, or Practice Direction, which applies to business to business debts. This first stage is designed to attempt to secure the debt without resorting to Court proceedings; any attempt to apply to Court to recover the debt without completing this could result in financial penalties at a later stage.
Each LBA will require different information depending on the nature of the debt, your business and the debtor involved, however usually the letter will include the following information:
- Your name and address;
- Their contact details;
- The detail of the debt, including services rendered, payment terms and other contract terms that apply;
- Identifying the legal legislation regarding unpaid debts;
- The amount of the debt and details of previous attempts to reclaim the debt;
- Any interest that you will be claiming;
- The time limit for the debtor to respond to the letter;
- Clarification that you will proceed to Court should the debt remain unpaid.
After you have sent the LBA, a business debtor has 7 days to respond with various options:
- They acknowledge the debt and either start discussions about payment plans if the debt is significant or they pay the full amount, which happens in the majority of cases as they do not wish to face formal Court proceedings.
- They respond saying that they do not agree that the whole or part of the debt applies.
- They ignore the LBA.
If the debtor either denies the debt or ignores the LBA, then you will proceed with a claim to the County Court, which we can support you through every step of the way.
While it may seem that you are able to draft a Letter Before Action yourself, it is always prudent to seek legal advice before sending this document, for several reasons:
- Chasing the debt yourself may lead to a further lack of response, whereas an understanding yet firm stance from a Solicitor can be enough to secure the debt in light of possible legal action being taken against the debtor.
- The LBA is simply the initial stage in recovering the debt. By using the services of a Solicitor, we can also manage the next stages, ensuring that we closely monitor the time limits that apply, and advise as to how to proceed should the debtor not respond or deny the debt.
- A badly drafted LBA or a letter with missing information can hamper your chance of success at a later stage.
- By coming to our debt recovery experts, you will not only receive advice in securing the outstanding debt, but also reap the benefits of our tailored service to review your credit control processes that can lead to a more efficient, streamlined operation.
We understand the burden that will be on you when faced with an unpaid debt, and that you may be cautious about chasing in order to preserve relationships, particularly if you are aware that the debtor in question is in difficulty. It is however also important to prioritise your own business, your own cash flow, profitability and reputation.
Our Debt Recovery experts are on hand to support you through the process and assist in securing your debt. To discuss any outstanding debts owed to your business or your credit control processes, you can contact our Debt Recovery team by calling Brian Kirby on 023 8071 7421 or emailing briankirby@warnergoodman.co.uk.
