Ideally, your customers pay you on time, without dispute. In reality some may delay payment, dispute accounts or whose cash flow is so impaired, you as a creditor will in effect be funding the business.
What steps can you take to ensure your position is protected and how can we help?
You should ensure you have robust credit control processes in place – usually those who “shout the loudest” and don’t accept delays in payment with robust action that can threaten the closure or winding up of a business will get paid.
Where your own attempts have failed sometimes a strongly worded letter from a legal agent threatening legal action and additional costs will result in payment of the debt or enable a proposal for you to consider a repayment plan.
Make sure you monitor any agreed repayment plans and always make contact immediately if in default, restating your position that legal action will be actioned immediately unless the account is brought up to date.
The account is in default and no response to legal letter
Where a business does not meet its obligations as they fall due, it is deemed insolvent. Businesses can be insolvent even where they have a high net worth with their assets being of far greater value than their liabilities.
You should find out as much information as possible about a debtor (individual(s) or corporate entity) before you invest money in debt collection or an insolvency process. Speak to us about a desktop search and financial analysis of the party in question to see what the prospects of recovery are.
Where funds allow, we can be appointed to act in provisional or interim capacities in certain insolvency procedures, in advance of full appointment. This can result in payment of your account and the costs incurred, or where no settlement, allows a better understanding of your chances of recovery and enables you to decide the next steps.
Our team have extensive experience in debt recovery and we can support you in turning around your aged debt collections.
We work with creditors and lenders throughout the UK and are happy to accept instructions to act as insolvency practitioners on your behalf – if you want to commence a formal insolvency process in your capacity as a petitioning creditor. We can work with your solicitor or introduce you to one that can assist. The formal company insolvency options available to you as a creditor, are to petition the relevant court for insolvent liquidation or administration. For individuals, sole traders or partnerships, the relevant process is sequestration. In all processes, our job as insolvency practitioner is to get as much money back for you the creditors as possible.
As an unsecured creditor what’s my position in dealing with insolvency?
Creditors rank according to law, and each class of creditor shares in the available cash by way of a dividend. Depending on the amount available, you may get none, some, or all of the money you are owed together with recovery of your costs incurred and statutory interest. To qualify for a dividend, you should submit your claim to the insolvency practitioner dealing with the company. We can assist in the preparation of your claim, interpret the insolvency practitioner’s report, and assist with any voting decisions that you may face.
Retention of title (ROT)
If you are a supplier of physical items to a customer, you should have a tried and tested retention of title clause in your terms and conditions of sale. A workable ROT clause, with clear identification of your items, means that you should be able to recover items supplied but unpaid – notwithstanding delivery of the goods has been made. Insolvency is the most common event in which ROT is relied upon – make sure that it works for you. We can assist with a review of the contract process and identification of goods, and in the event that your customer goes into insolvency, support any ROT claim that you make.
Landlord Hypothec
Where you are the landlord with rent arrears you have the added advantage of hypothec.
It gives landlords a right of security over moveable goods and property owned by a tenant within leased premises up to the value of any unpaid rent. It applies to unpaid rent only. Other sums due under a lease such as unpaid service charge or dilapidations costs are not covered.
You should therefore ensure you protect your interests as landlord at an early stage to avoid the removal of your tenant’s property from your premises where the rent is in arrears.
Court action and other diligence available
Depending on the aged debt profile including the contractual terms with your customer, the entity themselves, the value of the debt and the recovery prospects will determine the most effective routes for you to progress to maximise the prospects of recovery. We can advise you of the merits of this and whether you should consider these steps taking into account the nature of the debt profile you are seeking to recover.
We will help you assess your situation, explore your options, provide you with advice and develop a solution for you. To arrange a free, no obligation consultation email [email protected] or call 01592 630085. www.dunedinadvisory.com
