With the North East seeing a 49 per cent increase in insolvency-related activity in July, it's vital to keep your eye on the ball when it comes to debt recovery for your business.
Nailing down a solid debt recovery strategy is the key to reducing the stressful, time-consuming process of chasing unpaid invoices and mitigating risks to your business’s financial health.
Colin Churchward, partner at North East law firm, Muckle LLP, shares his five top tips for taking control of your debt recovery.
1. Share the burden
Colin says: “Having a strong debt recovery strategy in place is key, and bringing in third-party legal expertise as part of that strategy can be the difference between getting paid on time or not at all.”
Ranked top tier in the Legal 500 UK for its services, Muckle has been recovering debts for 30 years. Colin explains the firm’s approach through its bespoke service Muckle Collect, is tried and tested. “We recover 92% of debts, significantly higher than the national average of 40-50%. Clients are able to upload their debts to our online portal and track progress in real time…they also have the security of knowing that we’ll seek recovery of their outstanding debts without the heavy-handed approach that risks damaging important client relationships.”
2. Act early
“My advice to businesses is simple – act early. The earlier you act, the more options you have. The longer a customer owes money, the greater the chance of their business facing difficulties, potentially leading to default on the debt. Also, your customers will likely have multiple creditors. Businesses that are proactive with their debt collection will see their invoices paid first.”
“That includes working with a professional, accredited debt recovery service. Muckle can work to support you at all parts of the debt recovery process, but the sooner you engage with us – the less time, energy and money you’re spending trying to recover these debts.”
3. Ensure you have agreed conditions and a contract
“We would always advise that best practice is to have a contract in place that covers clear payment terms, policy on late fees and interest, and agreed conditions before working with your client. Even though it’s tempting to trust a business connection, a properly drafted contract with payment terms that are clear and simple and that protect you has the benefit of ensuring clarity should a dispute ever arise.
“That’s something we can help with
we can support with everything from T&Cs to contracts.”
4. Reflect on what works well
“A famous man once said, ‘if you always do what you’ve always done, you’ll always get what you’ve always got’ – looking back at what has worked and what hasn’t worked can be a significant factor in successful debt recovery.
“Muckle Collect really comes into its own by allowing our team to get far greater insight into probability and predictability. In short, it helps determine the approaches that get the best results for a range of clients, and this can help inform the team’s advice. This not only helps speed up the debt recovery process, but it also makes for better outcomes.
As Colin explains: “Ultimately, the data analytics and tracking aspect of what we’re doing marks us out as being very different in debt recovery – it strengthens processes further and helps us become even better at debt recovery for clients.”
5. Don’t forget to charge interest
“When a client is late in paying, you are legally entitled to charge interest known as ‘statutory interest’. Statutory interest is 8% plus the Bank of England base rate for businessto-business transactions; however, if you’ve already set a different interest charge for late payments in a contract, you cannot add statutory interest on top of it.”
For more information on how Muckle can help you, contact Colin Churchward on 0191 211 7969 or email colin.
churchward@muckle-llp.com