Any business that wants to manage its financial resources and make sure that it has sufficient funds available to cover its ongoing responsibilities and expenses must have an efficient cash flow procedure. The prompt collection of debts is a crucial part of a successful cash-flow operation.
In the UK, there are several laws that relate to debt recovery, including the Late Payment of Commercial Debts (Interest) Act 1998, which allows businesses to claim interest on late payments, and the Consumer Credit Act 1974, which provides protections for consumers in relation to credit agreements. You are also able to claim statutory compensation for invoices too, but this amount varies depending on the invoice amount.
To ensure that debts are recovered in a timely and effective manner, it is crucial to have defined debt recovery boundaries in place. The longer a debt goes unpaid, the more difficult it is to collect since the debtor may lose the willingness or ability to pay. Therefore, it is crucial to take action as quickly as possible to recover debts.
There are several steps that businesses can take to help avoid cash flow issues and improve their debt recovery process. These can include:
- Setting clear payment terms and communicating these to customers and clients
- Regularly reviewing and updating credit policies
- Using invoicing and payment tracking software to manage and monitor outstanding debts
- Seeking professional advice and support, such as through the use of debt recovery agencies or legal services
At McKenzie Legal & HR, we offer a range of services to help businesses avoid cash flow issues and improve their debt recovery process. These include:
- Company Audits to see how we can help you prevent clients or customers from not paying their invoices.
- Advice on cash-flow procedures including templates to use on your emails when chasing outstanding invoices.
- We can monitor late payments and chase debtors early on to prevent the matter from needing to be escalated, this helps keep client relations open between the parties.
- We can provide you with your own debt specialist email, which is linked to our debt recovery team. All you do is copy this in on your emails and this lets your debtors know you are serious, and can often help to get you paid, ahead of the other people that will be chasing them. We have had very positive results from this service, which has prevented many companies from needing to take full legal action.
- Debt recovery services. From issuing an initial debt chaser letter or a formal letter before action to helping draft court proceedings, right through to enforcing any judgment order necessary, give us your debtor book and we will clean it up and get what you are owed.
By implementing effective cashflow procedures and maintaining clear debt recovery boundaries, businesses can ensure that they have the financial resources they need to operate successfully and sustainably.
As you can see we offer a range of services to help businesses avoid cashflow issues and improve their debt recovery process. These services are available both in-house and remotely, so you can choose the option that best suits your business needs. Why not contact us to discuss how we can help you.
