Member Article

Preparation is key to successful debt recovery

The average value of claims being issued by Lovetts’ clients for overdue payments has risen by 22% in the past year. Whether this is down to businesses experiencing higher debts in the recession or a more robust approach being adopted to keep cashflow stable, the bigger the claim, the more vital it becomes to make adequate preparation prior to reaching court. The worst scenario is facing costs that outweigh the claim.

So ask yourself the following questions prior to progressing a claim:

1. Do I have the evidence?

A case may be defended so make sure you have the people and the documents to support your claim

2. Do I need to take advice?

If there is a serious dispute or you have doubts about your case – seek advice. You may have to pay the other party’s costs if you decide to stop the case.

3. Consider ADR (usually mediation)

If there is a real dispute, the court requires the parties to consider whether this should be settled before the claim progresses further. If negotiations fail you should consider ADR (Alternative Dispute Resolution) before going to court.

4. Consider a “Part 36“

This also applies where there is known to be a real dispute. If the debt is more than £5,000, you should consider making an offer that complies with Part 36 of the Civil Procedure Rules.

The offer says how much you will accept, including interest but excluding costs.

A well-pitched offer can put some pressure on the debtor to think very carefully before refusing it and forcing you to go to trial.

5. Is all in order?

• If you have a contract signed by the debtor, do you have it and is it definitely signed by the debtor?
• Have any disputes or queries been resolved or brought to a point where it is clear they can’t be resolved without going to court?
• Have any negotiations been dealt with?
• Has the debtor promised payment or admitted the debt in any way? If so, supply details.

6. Has the debtor agreed to your terms of business?

Some businesses are under the impression that a contract has to be in writing. It doesn’t. Every order involves the parties making a contract. For example, a contract is created when someone places an order over the telephone.

Where your company has printed terms they will only be part of the contract if:

• The debtor has signed a written contract containing your terms
• The terms were sent to the debtor before the order was placed so the debtor knows your terms of business
• The debtor signed up to your terms when completing your account application form, either because the terms were on the back or because they are referred to in the application form.

Once you are satisfied you have considered all alternatives and have done the necessary preparation, rest assured you have done your best to ensure any claim issued is a success.

www.Lovetts.co.uk

This was posted in Bdaily's Members' News section by Charles Wilson .