DEBT RECOVERY: If you’re owed money you have a number of options, says ROSS WEBB
With the Covid restrictions easing and the vaccination programme well advanced, businesses that have been working below capacity, or maybe not at all, for several months need to get ready for the economy reopening. No doubt there will be some obstacles, not least recovering any money you’re still owed and the possibility that some customers may be in difficulty themselves.
It is always preferable to come to an amicable agreement with customers who may be struggling, but if that doesn’t seem possible then matters may end up in the courts and it may be worth your while being prepared in the event that a customer does default. Early action can help avoid things going from bad to worse.
First, without sounding too obvious, it is important to have a full name, address, email address and telephone number for every customer.
Some basic due diligence should be undertaken before carrying out any work, and if your customer is a company, check them out at Companies House. Furthermore, record your agreements – whether that be signed Terms & Conditions or just an email agreeing to the fee – don’t start work until you have evidence of the agreement.
Also, you need to consider any variations to the initial agreement – what happens if the project changes in relation to what was initially envisaged?
Make sure you bill regularly. Staging invoicing has important benefits – broadly speaking, you’re far more likely to be paid manageable regular invoices – especially at this time of early recovery. Remember, it’s your livelihood and that of your employees, if you have them.
But what happens if you don’t get paid?
Well, it’s a fact of business life that disputes do arise – whether that’s around disagreements of scope or payments or anything else for that matter.
Where to start? First, check some of the basics. Have you issued the invoice to the correct email or postal address?
For those businesses finding their feet again it will also be better to negotiate an acceptable arrangement, such as a payment plan, rather than head for the courts.
Keep on top of invoices and maintain a dialogue with your customer – positive relationships can be worth their weight in gold (and paid invoices).
If you’re still faced with missing payments and attempts at a mutual agreement have failed, then you may need legal advice and going to court is not always the most appropriate or effective course of action.
It can be viewed as heavy-handed, it’s also complex and can bring significant costs, particularly in relation to the amount you’re attempting to recover.
The alternatives are varied and, in many cases avoid the conflict and friction that can arise through court actions.
Negotiation is key, and can bring quick results, and businesses can also consider a range of other remedies including adjudication, arbitration, expert determination or mediation.
All of these routes provide the opportunity to resolve a dispute without the issues that result from harder legal action – they can also be a path to maintain, or even improve client relationships.
Our own Commercial Debt Recovery service was designed to provide a bespoke debt recovery approach with the major objectives to ease the process for clients, recover what’s owed, and to maintain your business relationships – essentially using all the clubs in the bag such as those already mentioned and the experience and expertise of professionals who are dealing with similar issues for firms large and small.
The process of recovering what is owed is undoubtedly a complex one but ultimately if you’ve done the work or provided the service agreed you’re entitled to be paid.
Ross Webb is a partner in dispute resolution at Aberdein Considine