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By Author: Christian Browne - SummerfieldBrowne Solicitors
Total Articles: 1
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Most businesses at some stage will be faced with customers who do not pay on time as a result of which may experience cash flow problems. There is usually a reason why businesses do not pay on time and often its because they are in financial difficulties.
Whatever the circumstances, there is a high risk that late payers will become bad debts if the situation is not managed effectively and quickly.
Once you have followed your credit control procedures, you should not delay in taking action.
If you have decided to issue court proceedings to recover the debt that is due, the Civil Procedure Rules requires you to send a Letter of Claim to your debtor pursuant to the Pre-Action Protocol. The letter must set out the following information;
• The amount of the debt and whether interest continues to be incurred
• State if it is an oral or written agreement and specify the terms of the agreement
• Give details of how the debt can be paid including the methods of payment and the address and contact details where to discuss payment
• The address to which the Reply Form should be returned
You should send with the letter:
• An up to date statement of account showing the interest rate charged, any calculations and other charges being claimed
• Information Sheet and Reply Form
• Financial Statement Form
Pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 as amended, it is possible for you to claim late payment interest in addition to your debt. You can also claim a fixed amount of compensation dependent on the size of your debt which ranges from between £40 - £100. It is now also possible to claim compensation for reasonable costs in recovering any debt due. These claims must be incorporated into your Letter of Claim.
The letter should be dated and sent by First Class Post to your debtor. If no response is received within 30 days, you are entitled to issue proceedings by sending a Claim Form to the court.
Once your claim has been issued and service has been effected, your debtor will have 14 days in which to respond either by making payment, filing an acknowledgement of service or by serving a defence. In the event that no response is received at all, you will be entitled to apply for a default judgement which you can subsequently enforce to obtain payment.

More About the Author

Christian Browne is the Managing Director of Summerfield Browne Solicitors www.summerfieldbrowne.com.

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