Cash flow is crucial to a business when you are owed money it can be detrimental to your business. As unpaid debts hold up your business, affecting cash flow, creating uncertainty and potentially preventing the payment of your staff or creditors, harming your reputation. It’s crucial for any business to ensure that those you trade with do so on your terms. For debt matters services in UK get an advice that’s tailored to your business, call our team on xxxx xxx xxxx.
Our Debt Recovery Solicitors in Birmingham recognize that bad debts can affect cash flow, drain resources, and impede business efficiency. Every business should have effective cash flow procedures in place, and this includes facilities to ensure debt recovery. After all, outstanding invoices can be a company's biggest "asset" and turning this asset into cash is essential to enable a business to progress.
However, issuing a claim is not always straightforward to resolve the overdue payment. In spite of the time, effort and expense required to issue a claim and secure a Money Judgment, there are still no guarantees the business will get the money it is owed.
Even when the court finds in their favor the business may still have to take additional action to recover their debt and reclaim any costs and even then there remains no guarantee of full or even partial payment of the money owed. As a credible but possibly lesser-known alternative, the threat of insolvency action under the Insolvency Act 1986 for undisputed debts over £750 in value can offer a cost-effective and low-risk solution to the problem.
Under Section 123 (1) (e) a limited company is deemed insolvent if it is proved, to the court’s satisfaction, that it is unable to pay its debts as they fall due. By serving a correctly worded 72 hour winding up a notice on its debtors, who cannot pay within that time period, the creditor would be entitled to present a formal winding up petition to effectively close the company down.
In respect of non-limited businesses, partnerships and sole traders, the personal service of a Statutory Demand under the same Act gives the debtor 21 days to pay in full or face individual bankruptcy proceedings. Businesses should consider making better use of these notices and statutory demands to tackle late payments. Legal proceedings are not always necessary or effective and by exploring other enforcement avenues businesses can improve debt management.
Stages for Issuing a Claim:
The first stage of the legal process is to send out a letter before action is taken.
The second stage when payment is not received is to continue with the legal proceedings, by obtaining a County Court Judgment (CCJ) and commencing an enforcement action. Alternatively, insolvency action can be taken against the debtor.
Stage 1 – Letter before Action
A Letter Before Action (LBA) is a formal letter that requests the payment of a debt to your business and warns of the imminent issue of a court claim.
Stage 2 – Legal claim
If you send a Letter Before Action to your debtor but you do not receive a satisfactory response then the next stage in the legal process is to issue legal proceedings through the County Court. This is a formal process where the debtor will be sent a court form requiring them to pay the debt, plus interest and costs within 14 days.
Stage 3 – Judgment
A County Court Judgment (CCJ) is a Court Order that confirms that the debtor has defaulted on payment. The CCJ is the final decision by the Court which gives you the power to take enforcement action in order to collect the debt. The CCJ is also recorded against the debtor’s credit record affecting their ability to obtain credit.
Stage 4 – Taking Enforcement Action
Once a County Court Judgment has been obtained, it is then possible to 'enforce' that debt immediately. The most common method of enforcement is to instruct a Bailiff or High Court Enforcement Officer to attend the address of the debtor and collect the debt or seize goods. However, there are other enforcement methods that can be used depending on the circumstances of the individual case. Our Debt recovery solicitors in Birmingham will provide advice on the most appropriate method of enforcement based on their experience and expertise.
At Aman Solicitors Advocates, we have a dedicated team of Debt Recovery Solicitors in Birmingham, who are experienced in project managing financial recoveries and debt matters. Aman Solicitors Advocates has a wide range of experience in dispute resolution. We have a proven track record of successfully dealing with cases for our clients.Read More