What is the first step to recover an overdue invoice?
In our experience acting quickly will increase your chances of a positive recovery. The first step would be to send a Letter Before Action to the debtor. A Letter Before Action is a simple demand for payment.
Can I recover your costs of sending a Letter Before Action?
If the debt is owed by a company, In the event your contract does not deal with the issue of costs then you are able to rely on The Late Payment of Commercial Debts (Interest) Act 1998 which allows you to claim compensation at various rates depending on the level of the outstanding invoice. This act was amended in 2013 and the regulations widened to enable you to recover reasonable costs of collecting the debt in the event the compensation does not cover your costs.
Am I entitled to claim interest on an overdue invoice?
If your contract does not have a clause that allows you to charge interest on an overdue invoice then you are able to rely on The Late Payment of Commercial Debts (Interest) Act 1998 which entitles you to interest at 8% above the Bank of England’s base rate.
What happens if I do not receive payment in response to the Letter Before Action?
If you do not received payment within the time period given in the Letter Before Action, the next step would be to issue proceedings with a view to obtaining Judgment against them.
What is the Pre-Action Protocol?
This is a set of court rules that govern the process of issuing proceedings. A new pre-action protocol that governs the process of collecting debts from individuals to include sole traders and guarantors came into force on the 1st October 2017. Read our article to find out more.
If the Defendant does not respond to your claim, you will be able to request the court enter Judgment in default. The court will issue a forthwith Judgment which means the Judgment is payable immediately in full.
What is a defence?
Once proceedings have been issued, the Defendant could decide to respond to dispute the debt owed to you. This would be referred to as filing a defence. If a defence if filed at court, the court would forward us a copy of the Defence which we would refer to you. At this stage you would then decide if you want to continue with your claim and if so, we would advise you on the next steps.
What is Summary Judgment?
If the Defendant files a defence then this is an option that may be available to you to speed up the process of obtaining Judgment. This process requires a higher burden of proof to prove your claim which you would need to prove on documentary evidence. It is an application that can be made to court if the Defendant does not stand a reasonable prospect of success and there is no other compelling reason why the matter should be dealt with at a full trial
If I obtain Judgment, am I guaranteed payment?
In many circumstances payment will be received once a Judgment is obtained. If the Judgment remains unpaid it will remain on the Register of Judgments for 6 years and usually will make it difficult to obtain credit. It is therefore in the debtor’s best interest to make payment. Unfortunately payment cannot be guaranteed and you may need to take steps to enforce the Judgment. We can advise on the most suitable method of enforcement and carry out the necessary steps on your behalf.
What are my options if I need to enforce the Judgment?
You have various options available and we are here to advise you on the best option in your particular case. Click here to read about the different types of enforcement methods and call us on 01727 837161 to discuss your options.
What is the difference between a debt collection agency and debt recovery solicitors?
Debt Collection solicitors are able to purse your debt through the courts if required, including dealing with disputes related to your invoices.
Does it matter if my debt is owed by a Limited company, sole trader or partnership?
The process differs in so far as there is a different pre-action protocol for individuals including sole traders and partnerships. Apart from this the process remains the same.