Debt recovery Top Tips
Is a customer/client refusing to pay an invoice? Are you worried that taking legal action might be costly but just as concerned the loss will be damaging?
What to do if a client hasn’t paid
Invoice as usual
You should raise your invoice how you usually would. Payment terms, ideally, would already have been agreed, so all you need to do is ensure your invoice is easy to follow and payment methods are straight forward. That is the first step to preventing any issues and/or excuses in the future.
To preserve the client relationship, sending friendly reminders can be a much more beneficial tactic then a blunt request or demand. Politely reminding them that payment is outstanding will be preferable to the client relationship and helps avoid the situation escalating.
Respectfully informing the client you are giving them a final warning to pay may prevent the client relationship from deteriorating. This should be the last correspondence you have with them before proceeding with Legal action. Demonstrating you are attempting to settle the debt before opting for the alternative highlights to the client that there is a backstop deadline by which to pay. It can also be beneficial to make them aware that late payment interest is accruing, and that non-payment may result in court proceedings.
Cease any further action!
One way to encourage payment from a client is to inform them you are not going to continue carrying out any work until payment is received. This is sometimes referred to as an administrative hold meaning the lack of funding stops the work in progress. Why should you keep doing work when they haven’t paid for work previously completed? This is usually a successful strategy as the client could suffer from a loss without the expertise they previously relied on. But if it proves to be unsuccessful there is an alternative option.
Your last option would be to proceed with legal action against a client. Weighing up whether the legal costs outweigh the debt is important. Sometimes, as difficult as it may be, it may be preferable to write the invoice off as a bad debt rather than spending more money on legal costs. If you don’t want to write it off, taking further action could result in the client being ordered to repay debt, interest and fees which have arisen from instructing a solicitor. The first step, which may prevent further action being necessary, is a letter before action. In accordance with our fixed fees for debt recover, this will cost you £150 plus VAT. A minimal sum with the prospect for good recovery. You don’t have to follow it up with legal action, so why not take this step and assess the outcome.
For further information on successful debt recovery, don’t hesitate to contact Renée Ambler at Cognitive Law on email@example.com.