Pursuing slow payers of rent or chasing unpaid invoices is a time-consuming and often frustrating process for credit control teams, but when mounting debtor lists start affecting cash flow, do you know the best approach for tackling these commercial debts?

Brady Solicitors explain the actions you can take to recover your commercial debts and provide seven practical tips to help you minimise debts occurring in the first place.

The commercial debt recovery process

If your own attempts to recover outstanding commercial debts, usually via reminder demands or invoices, followed by a seven-day letter requesting payment in full, have been unsuccessful, it’s time to involve a solicitor and embark on the formal debt recovery process:

Letter Before Action (LBA) – this demands payment from the debtor within 14 days. Failure to pay will result in court action, although this often avoided when a LBA is issued. If the debt is undisputed, a statutory demand can be issued to enforce payment.

Issue legal proceedings – if payment is not made in full after the LBA is issued or if the debt is disputed, your solicitor can issue a claim to the court to start legal proceedings. If the debtor fails to respond within 14 days, you can request default judgment.

Judgment – or CCJ – if no payment is received after one month, your legal adviser can suggest the most appropriate method of enforcing the judgment.

Whilst there is redress for businesses facing the legal route of commercial debt recovery, the process can be frustrating and stressful. It is always better, therefore, to take preventative measures to minimise the debts occurring in the first place.

Seven top tips for minimising commercial debt and managing slow payers

  1. Get your invoices out on time! Sounds obvious, but issuing invoices late is a common cause of cashflow problems.

  2. Be proactive. Ensure you understand payment terms and then invoice accordingly. For example, if you know a customer pays on the last day of the following month, don’t leave invoicing until the last day – invoice them on the 26th or the 27th to ensure it is in their system well before the end of the month.

  3. Understand your role/position in their supply chain and manage your payment expectations accordingly. If you are a small business you may not be able to influence payment times.

  4. Are you chasing the right person? You may find you receive payment more quickly by speaking to your regular point of contact in addition to the finance team.

  5. Consider your supplier relationships. Do you want to take legal action against them? If you’re hoping for a long-term relationship it may be worth taking a softer approach in the first instance.

  6. Check the liquidity of your customers – perform credit checks where possible and only trade with those customers who are creditworthy.

  7. Ensure your credit control processes are as streamlined as possible to ensure that debts aren’t left to languish.   

Specialist debt recovery support

Successful debt recovery requires tenacity and commercial sense. Brady Solicitors’ specialist commercial debt recovery team is geared up to help companies with all aspects of arrears recovery, and non-payment of invoices. We can recover debts of all sizes using our quick and efficient recovery processes, even when the debtor is difficult to locate. Our expertise take away the hassle of pursuing slow payers and help to maintain cash flow.

For further information or advice on commercial debt recovery please contact Brady Solicitors on 0115 985 3450 or drop us an email.