If you’ve sent enough reminder letters to last you a lifetime and made phone calls that have led to excuse after excuse, now could be the time to take legal action to recover your unpaid invoices.
We know that you want to maintain good relationships with your customers; however, we also understand that you need to be paid for your business to keep running.
That’s why at Direct Route (www.directroute.co.uk/debt-collection-outstanding-invoices), we work with our customers to help collect overdue invoices, instigate payment plans, settlements, and deferred payments, and, where necessary, take legal action.
This post looks at what legal action you can take to recover unpaid invoices and outstanding debts and how to take this action.
Following a robust credit control process is your best chance at a successful recovery.
For example, as soon as invoices become overdue, make sure to send out payment reminders.
If there is no response, look to send a more forceful payment demand letter outlining any late payment charges or interest incurred.
If payment is still not received after several attempts and a certain time period has now lapsed, you should issue a notice to your debtor that you intend to issue court proceedings to recover outstanding amounts.
If there is still no response, and you feel you have exhausted all other options, now is the time to start legal action.
Note: It’s important to be aware of the information you must provide to a debtor and the time-lapse before issuing a claim through the courts. If you’re in doubt, speak to our professional collectors today on 0330 229 1991.
Is legal action worth your time and money?
We recommend that you ensure you have done everything you can to collect outstanding debts, keeping all of this information safe and secure for court purposes if required. If you do decide to go down the legal route, you will need proof that you’ve tried to resolve the payment problem before taking legal action.
You should also consider:
How likely are your customers to pay? If your client has no money or assets, legal action won’t work.
Has your customer not paid for a reason? For example, are they unhappy with the goods or services provided? Is the contract complicated? Do they believe they have already paid?
Talk to a professional – look for someone who has experience and expertise in debt recovery. Someone who can fully answer your questions and address any concerns. Is there another option than just the legal route? For example, there is the option of writing off the debt, depending on the situation and circumstances Read our latest blog post HERE to find out more about this topic.
How to take legal action against unpaid invoices
First, send a final demand for payment with a notice that the next step is legal action. This will either prompt action or serve as evidence in court.
Your final demand letter should include:
- Notice of default
- The total amount outstanding, including any additional fees/interest
- A request for payment
- An advertisement that you may take legal action if not settled asap.
Unpaid invoice legal action
You have the right to issue a claim in the courts against a commercial business or individual debtors. Filing a claim form with as much detail as possible alongside the issue fee.
(Small claims court is the least expensive option and least time-consuming. Designed to solve disputes quickly by keeping processes straightforward. However, the amount owed must be under a certain amount. Often, rulings are also given on the same day.)
Once the claim is issued, the court will seek to serve the debtor, who must acknowledge the claim within 14 days and respond directly within 28 days.
Again, customers may pay immediately once the claim has been received to avoid court.
If the debtor admits liability – great! If not, they must file a defence where the debtor is also eligible to include a counterclaim. From here, the court will then look to go to trial.
If the debt is less than £10,000, the court will allocate this to the small claims track, i.e., successfully claiming the debt; you can also recover court fees and fixed costs.
If a debtor owes more than £750, you can petition the court for a winding-up order, with the threat of insolvency prompting swift payment.
If the amount outstanding exceeds £5,000, you can present a bankruptcy petition to the court. A debtor’s assets can be taken and sold to pay outstanding sums as part of a bankruptcy order.
It’s worth noting that the judge’s decision is binding, so if the outcome goes against you, you could be ordered to pay your customer’s court fees.
If you win, you might still have to take further action to enforce the court order, i.e., instructing bailiffs.
Direct Route is here to help
With robust, tried, and tested successful processes, we work with you to provide the right solution to collect your overdue invoices quickly and effectively, supporting you with legal advice on unpaid invoices and all collection processes.
Make sure you’ve paid for the goods and services you provide.
Call 0330 229 1991 today.