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What to do if you are owed money by a customer?

A short guide on what you can do if you are owed money by a customer

Unfortunately it is a fact of life that from time to time customers will fail to pay your invoice or will delay in paying what is owed.

When this happens it can be very frustrating and can have a negative impact on your cashflow. The reality is while clients may fail to pay your bills, you still have to pay all bills you owe, Having clients who are late in paying your bills can impact on your ability to pay monies owed by you.

What can you do?

When you find yourself in the position of having to chase a customer for a bill owed to you, you should as soon as possible aim to speak directly to that customer. Jump on the phone, or even better turn up at their office. Customers find it a lot easier to ignore a chasing email email or letter than having to explain themselves directly to you. If this doesn’t work then you should speak to a specialised debt collection solicitor as soon as possible. Try not to delay, a customer is more likely to treat you seriously if you show that you are determined to chase the debt and accept no excuses.

What will your solicitor do?

First step is your solicitor should serve on the non paying customer a pre-action letter of claim. The letter of claim will set out the details of any contract, what you are owed, interest due and timeframe for when you will take further action if the money is not repaid.

If the outstanding monies are not repaid following the letter of claim, then your solicitor has two main options:

  1. Issue court proceedings for the debt
  2. Issue bankruptcy/winding up proceedings against the debtor

Issue court proceedings

If there is a reasonable dispute in regards to the debt being owed, then you should initiate proceedings in the civil courts to obtain a court judgment against the debtor. You will be seeking from the court a judgment that includes the principal sum owed, plus interest, plus your legal costs. The court proceedings if defended will take some time before you will get your case into court and obtain a judgment. How long that will be will depend on how complex or not the case is and the court’s timetable. Once you are awarded a judgment, the debtor will normally at that stage pay up. If they do not you have two options:

  1. Proceed to Enforcement of Judgments Office. The Enforcement of Judgments Office job it is to enforce court orders. They will for a fee attempt to obtain the monies outstanding as set out in the court judgment.
  2. Bankruptcy/Winding up Proceedings. You can proceed to apply to make a person bankrupt or wind up a company, if there is no reasonable dispute in regards to the debt being due and owing. Therefore if there is no reasonable dispute you can proceed to bankruptcy/winding up proceedings without needing to obtain a court order beforehand. Or you can obtain a court order and then proceed.

The above gives you an outline of some of the options open to you when a customer refuses to pay. Don’t delay if you are owed money, speak to an expert solicitor today on 028 90 36 5595.

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