It’s an awkward position to be in for any business owner. You’ve kept your end of the bargain and delivered your service or product as per the contract, but now your customer isn’t keeping up their end.
Nobody wants to ruin a relationship with a valued customer, but at the same time, you have bills to pay.
Here are six ways to get paid while salvaging your business relationship.
Speak With the Debtor Directly, If Possible
There are many situations when a firm, but polite and friendly call to a debtor can get the ball rolling and moving them to action to pay the debt.
So, before trying other options, endeavor to speak to the individual directly first.
Consider Using A Company Offering Debt Mediation
Debt recovery can be a long and drawn-out process that can cost a lot in the end. This is why so many debt collectors look to professional debt mediators to help.
These are trained professionally in assisting both sides coming to an agreement.
They are well-versed in negotiation and will look to find a happy medium for all involved so both sides get what they want.
Send Out Reminders In Writing Regularly
Send regular reminders via the post, then both you and they have physical evidence that you have been trying to chase the debt.
You could threaten them with legal action, if that’s something you are considering doing at some point.
Issue an LBA Final Warning
It cannot be overstated how effective an LBA, also known as a Letter Before Action, can be when you are trying to recover debt. In this kind of final warning or demand letter, it will normally feature
- The amount owed by the debtor
- A timeframe to resolve the debt within
- The consequences if they fail to resolve the issue
It is also important to note that any legal or other action that follows as a consequence will include claims for all court costs and fees, if possible.
For Debts Owed to a Business, What Are Acceptable Types of Legal Action?
When all else fails and you’ve tried just about everything from sending out written reminders for payments, tried to phone the debtor or even availed yourself of third-party debt collectors, you need to take your debt collection plan to the next level.
This next stage should involve issuing a letter that outlines to the debtor the legal action you are planning on taking, while offering them one last time to pay up.
Carlo Pegna, a Legal Executive who specialises in recovering commercial debt and owner of Master Collections says,
“A huge reason why late payments are such a massive issue these days is because lots of companies are reluctant to hire debt collection services.
This is based on some debt recovery firms having poor reputations and the methods they use being damaging to your reputation.
There’s absolutely no need for this and I’d avoid any agencies that use these tactics.
The law is on your side if you play by the rules and we usually secure payments within 9 days from the date our letter or notice is posted”
If, though, they still don’t pay, you are within your rights to pursue the following forms of legal action:
County Court Proceedings
This last tip may obviously strain a business relationship, but by this point, you’re probably in agreement that you don’t want the custom of a party who won’t pay their way.
You need to first start proceedings through the county courts. With this, the non-paying client or customer has 14 days to clear the debt either fully or in installments.
They are legally allowed to dispute the debt. However, if this claim is not successful or they just avoid the claim form altogether, they will receive a CCJ or county court judgement.
With this, the debt becomes official and you are then able to pursue more serious action.
By the end of this final step, you should be closer to getting your outstanding debt paid.
Ideally, your customer pays up earlier in the process which will allow you to maintain a trading relationship.
Sometimes, no matter the steps you take and however hard you try, that just won’t happen and may even be for the best. Following the tips above will give you the best chance of avoiding this.