It has become clearer over the past few months the impact that the COVID-19 pandemic and resulting Government restrictions are having on businesses up and down the country. It seems that on an almost weekly basis we are hearing about the latest company to enter into administration.
Whilst there may be many reasons to cause a company to enter into administration, for SMEs it is often the impact of unpaid invoices and the negative effective that has on cash-flow. Many businesses may have felt that there was little that could be done to tackle late payers during lock-down, and even perhaps feel the same now as we start to emerge into the new normal world of business. Is it the case that businesses are limited in the action that they can take?
Back in April 2020 we explored the issue of commercial debt recovery during lockdown in this article – Debt recovery during the Coronavirus (COVID-19) pandemic. In summary, our advice to SMEs was that whilst Government restrictions may cause delays to the order of things, the usual process could still be followed and creditors should consider continuing as normal to avoid an inevitable post-lockdown bottleneck.
Of course there is never any guarantee that taking formal legal action will result in payment and debtor insolvency is always a risk, even in normal circumstances, but one of our client’s recently reaped the benefits of continuing to take the necessary steps to collect their unpaid invoices. In May 2020 we were instructed to issue court proceedings against three debtors on behalf of a client. All three had ignored previous warnings from the client, as well as our letter before action. In all cases the debt had become due long before the outbreak of Covid-19 or the Government’s announcement of lockdown.
Once the sealed claim form had been returned by the court, we arranged service of the same by recorded delivery and email. The result? Almost instant responses from the debtors culminating in full payment of each claim.
Over a period of 3 months, Moore Barlow have recovered for this one client in excess of £22,500. Sums which could turn out to be vital to the client’s survival as we transition out of lockdown. Even better news for the client was that each claim included interest, compensation and reasonable costs claimed under the Late Payment of Commercial Debts (Interest) Act 1998. Payment of these sums by the debtors has significantly reduced our client’s net legal costs in recovering their unpaid invoices.
As part of guiding you and your organisation through Covid-19 recovery, we have a webinar aimed at creditors seeking debt recovery advice.
The debt recovery team is able to assist clients with all their debt recovery queries and provide commercially focused, practical advice on the options available. For advice on debt recovery please call us on 01483 464229 or alternatively email Ben Millward or Dan Baker.