Is Your Business Owed Money? Your Debt Recovery Options

Is Your Business Owed Money? Your Debt Recovery Options

This month Carolyn McAndrew, Chartered Legal Executive at Gilbert Stephens Solicitors’ Exeter office, talks about debt recovery options.

Debt recovery can be complicated and many businesses rely on timely payments from their clients in order to maintain cashflow and continue trading.

There is a maximum period of 6 years to pursue a debt before it becomes statute-barred, meaning that it is no longer legally enforceable. If you need to pursue a debt, it is therefore sensible to take action sooner rather than later.

The first step is to make a formal demand for the debt, known as a letter of claim. It is possible to claim interest on overdue invoices, even if this is not set out in your contract. In business-to-business transactions, the legislation also allows you to claim compensatory payments for each late invoice.

If it is not possible to reach agreement through correspondence, it is worthwhile to consider alternative dispute resolution, for example mediation. Mediation is a confidential process which is conducted by a trained professional, who will work with both parties to try to facilitate an agreement.

If all else fails, another option is to go to Court to get a Judgment against the debtor for the debt, though Court action can be expensive and time-consuming. It is wise to consider whether the Judgment will be enforceable practically, i.e. whether the debtor is solvent and can make the payment.

If you would like advice concerning debt recovery, get in touch with Carolyn McAndrew on 01297 424242 or email DebtRecovery@gilbertstephens.co.uk

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