When faced with outstanding debts there are many things to consider, such as how far to pursue the debt and how to do so without alienating a previously reliable client.
Before taking further action to pursue a debt, it is wise to weigh up the prospect of recovering the money owed against the time and expense that will be involved in the pursuit. Small debts, say of less than £100, might be better written off if there is an expectation that a reasonable amount of work will be involved as opposed to a couple of telephone calls. However, it is important to also consider whether ignoring one debt will set a precedent for other small debtors in the future.
If the debt is larger, steps should be taken to determine why payment has not been made. There could be a dispute that needs to be resolved or the customer might have cash flow difficulties. If so, a partial payment or instalments could be negotiated. Negotiation is often a good way forward in circumstances where the customer is unable to pay. It can avoid the expense of further action and maintain a good relationship with the client to ensure future business if their monetary problems are temporary in nature.
If there are CCJs outstanding against the client already, recovering money from them could prove difficult, particularly if the client has become insolvent. If a 'retention of title' clause exists, however, it might be possible to recover any goods involved in the transaction.
To ensure that valued clients are not alienated, a professional, diplomatic but firm approach should be taken. The situation should be discussed directly and any steps that will be taken to recover the debt should be clearly set out. Always let the customer know before any legal proceedings are instigated. If the client wants to avoid negative publicity, this might even be enough to make them pay.
For more information, free initial advice or a general discussion, please contact AR Legal Collections on +44 (0)20 8202 0730.