- May 1, 2020
- Posted by: Josiah Hincks Solicitors
- Category: Legal News
How can we help your business keep the cash flowing?
Zoe Davis | Trainee Solicitor
With so much uncertainty around the current Covid-19 crisis and how this will affect the economy, it is vital that businesses keep their cash flow moving with regular payments from their debtors.
Businesses may be quick to consider Court action to reclaim their debts, however the process can be expensive and risks the loss of regular customers or consumers. Further, failure to engage in the Pre-action Protocol for Debt Claims can be strongly criticised by the Courts and potentially result in penalties for non-compliance.
This leaves businesses in a difficult situation as reminders sent out by them aren’t always enough to persuade a debtor to make payment and businesses may worry that getting a solicitor involved is too costly.
However, a solicitor’s letter provides a little more encouragement to the debtor without the need for Court action. That is why we offer our Commercial Debt Recovery Scheme.
What is the Commercial Debt Recovery Scheme?
We shall send a free of charge 7 day debt recovery letter to your commercial debtor.
This letter will have dual purpose. It will encourage your debtor to make payment with the added pressure of them knowing a solicitor is involved as well as acting as a Letter of Claim. This will mean that you have complied with the Pre-action Protocol so if you still don’t receive payment, you can issue proceedings without worrying further.
The great thing about our Scheme is that we prepare send the letter completely free of charge. If your debt isn’t paid, we don’t get paid. If your debt is paid, we take payment of the value of interest and compensation payable on your debt.
What interest and compensation is payable?
Where a debt isn’t paid on time, that debt attracts statutory interest pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 at the rate of 8% per annum over the official dealing rate in force at the time the debt was due.
The Act also provides a fixed fee compensation amount due on each outstanding invoice. The rate of these compensation payments depends on the invoice value.
What if my debtor doesn’t make payment?
If we send the letter and your debt is still not paid, we don’t ask for any payment from you meaning that you can issue a claim in the Court without having lost out by paying for pre-action correspondence.
We can then help guide you through the Court process to reclaim the debt or you can choose not to pursue the matter any further. It is completely up to you.
For more information you can contact our debt recovery team and we would love to answer any questions you may have. https://www.josiahhincks.co.uk/business-legal-services/debt-recovery/