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Has your customer not paid you? 5 reasons you should use a solicitor



Introduction

 

At some point just about every business will be faced with a customer who refuses to pay and ignores all your reminders. In fact, figures out recently show that the number of businesses facing bad debts is actually at a 10 year high. 

 

In terms of pursuing recovery, there are essentially two main options available to businesses: solicitors or debt recovery agents. But with debt recovery agents generally regarded as cheaper, why should you consider instructing a solicitor instead? In this article we look at 5 reasons for using solicitors over debt recovery agents when pursuing outstanding debts.

 

1. Value for money

 

The first point to consider is what you actually get for your money when instructing a debt recovery agent. It is not uncommon amongst some debt recovery agents to offer a letter before action service for as little as £2.95 plus VAT. The problem however is that this letter is very often not compliant with the pre action protocol, as set out in the Civil Procedure Rules, and means it rarely leads to payment. The result is that at some point a further letter will then need to be sent to the debtor before court proceedings can be issued, this time in line with the protocol. This invariably creates a delay in the collection process and a further cost to you.

 

2. Initiating court proceedings

 

Debt recovery agents cannot initiate county court proceedings. They can only request that the debt be paid. Many debtors are now aware of this and so, inevitably, many such requests for payment from debt recovery agents often go ignored. By comparison, solicitors can issue proceedings and so demands for payment from a solicitor coupled with a threat of court action generally has a more persuasive effect. 

 

3. Case assessment

 

The letter before action service offered by many debt recovery agents doesn’t include any assessment as to the strengths of the case. Instead they simply send the letter and will then report back if the customer refuses to pay or disputes the debt. Solicitors by comparison can evaluate the legal position as part of its service, drawing on both legal precedent and their experience from similar cases previously. By knowing the strengths of your case from the outset, and the chances of succeeding, you’re then in the advantageous position of being able to know how aggressively to pursue this; whether it’s commercially viable or whether you’re better placed to look at some sort of settlement or indeed write off the debt entirely.

 

4. Alternative dispute resolution

 

Depending on the circumstances and particularly the legitimacy of any reason why the customer is disputing the debt, it may be that the case is better placed to be resolved via alternative dispute resolution (ADR). Indeed this is now actively encouraged by the courts, with the risk of cost sanctions for those parties who are found to unreasonably refuse. Whilst very rarely a service available from a debt recovery agent, solicitors specialising in litigation generally have a particular expertise in organising, conducting and obtaining the best possible results from ADR.

 

5. A more rounded service

 

As well as assisting in the collection of a particular debt, a solicitor can also help protect your business against future customers failing to pay. This can include advising and assisting in the implementation of internal credit control procedures within your business, as well as ensuring your terms and conditions with customers are both robust and compliant with relevant legislation.

 

Conclusion

 

So, in summary, if you have a customer who hasn’t paid and you’re now looking at pursuing this, do consider instructing a firm of solicitors rather than a debt recovery agent. You might find you’ve got a better chance of recovering the debt that way.

 

If you’re owed money and want to know more about our services or need any assistance, please give Wesley a call on 01202 888 300 or email him.


Article Date: 10/09/2019

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