Due to the impact of COVID-19, thousands of successful business owners have been impacted across the UK. Order cancellations by the clients, slow or no payments by the debtors are the basic problems faced by the businesses during COVID-19. The impact was so high that many small businesses even closed their offices and started some new work to compensate for the losses and to earn their living.
- Personally visiting the debtor
- Try to speak with the debtor
- Sending written reminders and keeping each record safe
- Take the help of debt mediation service
- Credit hold
- Write a letter of final warning before taking any action
- Take a legal action to recover debts
Recovery options for Business debt
Many good companies have also taken the benefit of the government schemes such as coronavirus business interruption loan scheme, bounce back loan scheme to recover from the situation and come out of their present cash flow crunch. Many businesses that are facing issues in recovering their money back are trying their debt recovery options. There are a lot of measures you can take to recover your debts which are as follows –
Personally visiting the debtor– Personally visiting the debtor is the most preferred way of communicating and solving the problem. Decisions you make in the face to face meetings are considered better than the decisions you make over phone or e-mail.
Try to speak with the debtor– Sometimes just a friendly but professional call with the debtor can end up everything with ease and there is no need of escalating the issue further. Politely reminding the client or debtor over the phone about the payment is the first and the foremost step concerning debt recovery.
Sending written reminders and keeping each record safe– Sending written reminders in the form of letters, e-mails can be another way of recovering your debt. If the payment due date of your client has been passed and you have not received any communication from their side, sending e-mails, letters at periodic intervals may help in the releasing of payment.
Take the help of debt mediation service– Debt recovery can be an expensive and a time-consuming affair if we skip the opportunity of taking help from a debt settlement intermediary. Debt mediation service means the service provided by mediators who are professionally trained people and help both the parties to arrive at a settlement. A mediator is a person whose main aim is to make a settlement between both the parties to make them arrive at a decision where both the parties are mutually agreed and satisfied.
Credit hold– Another way of recovering your debt and asking your client to pay is to stop doing work for them till they pay your outstanding debt. Most probably this option solves the problem and the client becomes ready to pay for the outstanding debt as the business might suffer without providing them with services. In case you have still not received the payment, you do have other options for the debt recovery.
Write a letter of final warning before taking any action– Letter before action (LBA) is the last warning letter issued by the business to their client as a reminder to pay the outstanding amount. It includes the following information –
- How much money is owed?
- A clear timeframe to pay the amount (i.e. 14 days, 30 days etc.)
- What will be the consequences, if not paid on time?
- If any legal action is taken, the amount of claim should also include court fees and other costs.
Take a legal action to recover debts– When all the efforts of debt recovery become unsuccessful, you need to prepare yourself for taking legal action against the customer.
- If you want help to pursue a debt up to £10000, you have to put your case in the small claims track i.e. part of the county court. It is a rapid and relatively simple method of claiming debts for individuals and small firms.
- If your court claims are between £10000 and £25000, your case will go through the fast track procedure whereas Multi-track procedure has been followed if the claim amount is more than £25000.
It is recommended that you must take the help of a solicitor or a professional expert before going for court proceedings as sometimes the procedure becomes more formal and complex when a Defense is issued by the defendant.
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