Chasing Debts: How to Get Paid Quicker!

As a small business chasing debts myself, there is nothing more annoying than someone who just won't pay up. It is a frustrating experience and can be hugely damaging to the relationship with your customer ...

You may have already read my previous blog post on chasing debts to help reduce the chances of having a bad payer, but in that post I mentioned the Notice to Action letter which I have used for those more stubborn bad payers.

"I was just on the verge of using a local debt collection service for 3 more stubborn debts a couple of years ago!"

This can be an excellent option for any small business woner, and I can certainly recommend a service if you need to use it, but as you pay a percentage of the debt collected I just wanted to have one last go at getting the money in myself.

The clients had ignored reminders and statements, and I must admit I was a little too chicken to call them myself so I used my Federation of Small business membership and designed a Notice to Action using the wording and advice found on their website.

The first thing to note is that emails are easier to ignore than post. We don't get much post these days so sending this as a letter with recorded delivery will definitely get noticed. It depends on the size of debt being chased as to whether you deem it necessary. If it's a small debt then an email with the wording changed and a read receipt will suffice.

"Also make sure that the notice is not the first time you have chased them!"

Keep a record of when you have sent statements or reminders in the past so you can refer to them accurately in the letter. This will all help if you do have to go the legal route and seek professional help in getting the debt paid. Here is an example of the letter/email I use. Do feel free to copy and personalise for your stubborn debts.

Notice before action

We refer to our invoice number 6752 dated 5th April 2020 in the sum of £237.73. We also refer to our reminder email dated 2nd May 2020.

We note that the invoice still remains unpaid and the sum of £237.73 remains outstanding.

In the circumstances, we are now writing to formally demand payment of the amount detailed above within 7 days from the date of this letter/email. Should payment of the invoice not be forthcoming within this period of time, we will be passing our debts to a debt collection service and may issue civil proceedings against you without further notice.

We also put you on notice that we are claiming statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 at the rate of 8.25%, being the Bank of England base rate plus 8%, calculated on a daily basis from the date of the invoice as stated on the original invoice until the debt is paid. (Note You cannot claim statutory interest if there's a different rate of interest in a contract.)

If civil proceedings are issued against you, a claim will also be made for statutory interest on the amount outstanding calculated as detailed above and for our legal and court costs.

We hope that, despite the clear intention of this email, legal proceedings may be avoided and we look forward to receiving full payment within the time stated.

I found that in the case of the three clients I was chasing they all paid up promptly after getting this notice, and I didn't need to take further action.

Please, if you do use my template then do let me know if you are successful in getting your debt paid, or share your methods (hopefully none involving baseball bats) to help my other readers.

If anything I've written here resonates with you, call me on 01604 420057 and let's see how we can help you.