Last updated 00:38, Wednesday, 05 March 2008

Time-consuming: Having supplied the goods or services, there is nothing worse than having to chase payment.

RECOVERING debts from sluggish or non-payers is a time consuming and frustrating task for many businesses.

Having supplied the goods or services, there is nothing worse than having to chase payment – and sometimes you can feel that your debtors know every trick in the book to delay paying.

Traditional methods of debt collection like sending out a “Letter before action” from a solicitor followed by calls or visits can still result in payment.

Unfortunately, many debtors seem to play the system, leaving their payment until the last minute and treating your action as extended credit, while you end up paying recovery costs.

Talking to a debtor about why an invoice is unpaid can often bring a swifter or cheaper solution.

If there is a genuine or temporary reason for non-payment, it may be that new terms can be negotiated which see the debt paid in smaller instalments.

Even if the discussions don’t result in payment, you can make a more informed decision about the likely effectiveness of legal action. If the debtor has no assets, you may just have to accept that you are not going to get your money.

For those debtors who do have some assets, a Statutory Demand is one effective way of focussing their minds on your invoice. For debts equal to or over £750, the Statutory Demand is formal request for payment. The debtor must not ignore a Statutory Demand and he needs to apply to the court to have it set aside within 18 days of it being served.

If your debtor does ignore the Statutory Demand or fails to have it set aside, you can move on to the next step.

In the case of an individual debtor, you can make an application for the debtor to be made bankrupt, or, in the case of a corporate debtor, an application for the company to be wound up.

The potentially serious consequences of the Statutory Demand make it an excellent way of showing non-payers you really mean business.

All recovery action has a cost so it’s important to choose the most effective tool for the each debt.

Information about debtors is essential, so make sure you know exactly who you are dealing with when you take that order and before you start giving out credit.

n Kevin Holliday is a Legal Executive in Burnetts’ debt recovery department. For advice and information on debt recovery, contact Kevin on               01228 552222       .

n Burnetts is hosting a free seminar on Debt Recovery on Thursday, October 11 from 5.30pm to 6.45pm at their Victoria Place office. Bookings can be made at the events pages of www.burnetts.co.uk

or by calling Lauren or Angela on               01228 552222       .