Collecting commercial debt before cash flow is in crisis

Leigh Sunter, Litigation Lawyer at Pearson Solicitors and Financial Advisers

Cash flow for North West businesses is an ongoing battle, but with mounting pressures and increased costs businesses could be facing a bleak midwinter. 

To keep the money coming in SMEs should consider appointing specialist commercial debt recovery solicitors to try and prevent their businesses running into difficulties - making sure they are fit for trading well into 2023. 

Outstanding debt can cause huge cash flow problems and threaten the viability of a business. Prevention is better than cure so you must act to avoid matters escalating. 

Leigh Sunter, Litigation Lawyer at Pearson Solicitors and Financial Advisers warns: “In our experience, the sooner you act, the more chance you have of recovering payment, getting a payment plan in action, or sorting out your debts satisfactorily.”  

“It’s a tough time out there, whatever problems you have you can bet your suppliers and customers are also facing the same issues.  Businesses have had to deal with a pandemic, now they have inflation and mounting bills, so I am sure we will see commercial debt becoming a big issue as costs continue to rise.” 

“We have years of experience working with businesses on how best to handle debt recovery and have in many cases turned things around for business owners. It pays to get the experts when it comes to chasing commercial debt as we know what legal steps are needed in securing payment.” 

There are a variety of ways Pearson act for clients:  

• write a “letter before action” on your behalf to the debtor 
• if the letter before action does not result in payment, we can start court proceedings in the Small Claims Court  
• where the debtor is unable to pay their debts as they fall due, we could start winding up proceedings or bankruptcy proceedings (as appropriate) 
• our debt recovery department uses a proven combination of letters, telephone calls, court proceedings and common sense to recover payment from your debtors 

In many cases, a solicitor’s “letter before action” to the debtor is that extra push needed and will bring about immediate payment. It is a simple and cost-effective solution. However, if a debt becomes contested, then we can advise businesses on the various options available.  

Debt recovery can also give rise to more difficult issues. For example: the debtor might dispute that all or any of the payment is due the debtor might be complaining about the quality of the goods or services you have supplied you might not feel able to take action say, for example, if the debtor is a personal friend or an important customer you don’t want to irritate 

“Every day matters when it comes to debt and so I would advise business owners to act now to improve their cashflow.  There are a few things creditors can do themselves to speed up the process before appointing a specialist commercial debt recovery solicitor; be certain you have correctly identified the debtor, be precise about who you have invoiced – is it an individual, company or limited liability partnership, so you know exactly who you are chasing for payment,” advises Leigh. 

“Post pandemic, businesses were buoyed up by Government intervention, but now payment holidays have ended and we’re all facing a cost-of-living crisis there will potentially be reduced access to credit and this could have an impact on debt as businesses have to face their true financial future.” 

For advice on any issue regarding commercial debt please contact our Commercial Dept Recovery team on 0161 785 3500 or enquiries@pearsonlegal.co.uk 

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