Monday, November 12, 2012

Debt Recovery, What Are My Options?

Imagine this scenario.
Your client phones you and request delivery of some goods, A delivery order and an invoice for the goods are raised and the goods are promptly delivered the next day to the customer. The delivery order is acknowledged and invoice handed over your customer with a 30 day credit period. 30 days lapses and the customer failed to make payment. Despite various reminders, the Customer still refuses to pay the outstanding amount. That regular customer has now become a debtor of your company. In a perfect world you deliver the goods and you're paid within your payment terms, but as frustrating and time-consuming as it is, the business world have to deal with these types of situations on a daily basis.
What are your options?
Your first step is to instruct a lawyer or debt collector to send a letter of demand to the client or customer informing them of the contract entered between the parties and the amount outstanding, and giving them a time frame within which to pay the outstanding amount or face legal action. It is wise to have a solicitor do this as care must be taken in drafting a letter of demand as a defective letter of demand could result in complaints being made against you for harassment.
In a matter where the debt is owed by a company, you can instruct your solicitor to issue a statutory demand if you receive no proposal of settlement or response from the letter of demand. A statutory demand is similar to a letter of demand but it states that the debtor has 21 days to pay the entire amount to your satisfaction failing which you could take steps to wind up the company.
Your customer's options upon receipt of the demand
The customer may contact you to settle the entire outstanding amount or more commonly negotiate a payment arrangement to settld the entire amount due and owing to you together with your legal costs and interest and this in effect would bring the entire episode to an end without the need to proceed with further legal proceedings. In majority of cases this is the option take as legal proceedings may be time and financially costly for the customer.
The worst case scenario your customer continues to disregard your demand and refuses to pay. At this point in time if the debtor does not respond to your written request/demand you may consider taking further legal action.
Legal Proceedings
If you wish to recover your debt through legal proceedings you should certainly seek the advice of a solicitor experienced in this field, such as a Debt Recovery Lawyer or Debt Collector. They would have the experience, resources and skill to guide you through the court process to gain a successful outcome.

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