Debts are a big problem for business finances, particularly those of smaller companies. It’s essential to take charge of these before they get out of control. You can take a number of steps to successfully recover business debts.
The problem of business debts
The late payment of invoices has become a huge issue for many small businesses in the UK. Around a third of invoices due to smaller companies are paid late. The average amount owed for a late invoice is over £6,000 and businesses need to get on top of this to improve their cash flow.
Small businesses can run into difficulties when they have to chase up unpaid invoices. Figures from the Federation of Small Businesses (FSB) highlight that 37% of businesses have experienced cash flow problems; 30% have been pushed into using an overdraft; and 20% have seen profits affected. It can lead to businesses failing in the worst cases.
How to recover debts
The first step to getting payment from a debtor is to contact them. Invoices can sometimes be overlooked, so this is often an effective tool, and companies can hold out till the last moment. You may need to negotiate a settlement or payment plan with them if they are having trouble paying. This approach could be less costly then escalating the issue.
Using the courts to recover debts
You can make a claim against them in the courts if you still have no joy getting payment from a debtor. Once you issue a claim for a County Court Judgement (CCJ) you will incur additional costs. These can be added to the amount the debtor owes.
When a judgement is awarded in your favour, the debtor will be given a period to pay, or the court may have stated it can be paid in instalments. Where a debt remains unpaid after this time you can have it enforced.
How do I enforce a CCJ?
A County Court Bailiff can carry this out with a warrant of execution. Judgements for over £600 can be transferred to a High Court writ and enforced by High Court Enforcements Officers (HCEO).
At the Bailiff Company we can provide this service for you, with costs added to the debtor and a compliance fee returned on successful enforcement.