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Commercial Debt

Commercial debt can be a daunting prospect and often requires a rapid response before cash flow comes under pressure. Relying on other businesses to pay you for work can also be tricky especially if they too are struggling financially or suffering from bad debtors. Business debt can have knock on effect so if your struggling to pay a supplier due to late payments and a tight cash flow, they too may feel the effects of late payment.

Invoice management systems, are a great way to control and manage your invoices online 24/7. This streamlined system gives businesses the opportunity to focus on other key aspects of their business. An online credit control system is a great way to influence a good customer response and relationship ensuring that invoices are paid quickly before any cash flow problems arise.

Positive Collections provides a FREE invoice management system which allows you to import your client list and upload your raised invoices. This simple system leaves you in control at all times, with an easy to follow process which will improve your cash flow, reduce paperwork and save you both time and money chasing outstanding payments.

Find out how Positive Collections can help you!


Late Payment Regulations

In 2013, amendments were made to the Late Payment of Commercial Debts Regulations which gives businesses the right to claim interest on late payments from other businesses. The regulations are as follows:
  • When a debt is owed, the creditor can force the debtor to pay interest as well as any reasonable costs incurred by the creditor in order to recover the money owed due to late payment or a failure to pay for a service.
  • Businesses have 60 days to pay the debt. However parties can agree on a longer time period providing it is not grossly unfair to the creditor.
  • Any public authorities or bodies have 30 days to pay the debt. However, unlike business-to-business transactions, you cannot negotiate a longer time period.
  • Depending on the amount owed and any additional costs incurred, the creditor is entitled to a fixed penalty charge from the debtor. Here are the fixed amounts available:

    - Debt owed up to £999.99 - £40 charge
    - Debt owed £1000 to £9,999 - £70 charge
    - Debt owed £10,000 or more - £100 charge
  • These regulations apply to contracts concluded after 16th March 2013 and apply across Europe.
It is important to note that there is no need for a small business to exercise their right to claim interest. Many businesses may avoid pursuing an interest claim if they believe it will have a negative impact on their existing relationship with a customer. If you do not intend to use this Act, then it should be stated on all your invoices and any letters issued seeking payment.


Debt Recovery Stages

Positive Collections uses a 4 stage recovery process which can be used when a customer fails to pay you for a completed service. These 4 letters are issued on your behalf to your debtor in order to recover any monies owed. This process costs a one-off fee of just £4.99 and can be stopped at any time. A fast track option is also available. This fee covers you for all 4 letters even if it requires less letters for the debt to be cleared. Once the debt has been paid you will need to stop the recovery process via your Positive Collections account. If however, your debt is not cleared and the debtor still refuses to pay, you may issue litigation proceedings which is handled by MTA Solicitors LLP.

For further information on this debt recovery process click here.

Letters issued:


Letter One: this letter is sent to the debtor stating that we have been instructed to recover the outstanding debt and are to contact you directly to make payment. If you do not wish to receive direct contact from the debtor, we will be happy to accept any communication from the debtor on your behalf. Please note that this will incur a small administration fee.

If the debtor settles the payment within the specified timescale you will then be able to stop this process and no further action will be taken. If your debtor fails to pay the debt, a second letter will be sent providing you do not stop the process.

Letter Two: this debt recovery letter will proceed the first letter issued automatically if payment has still not been made and the process has not been stopped.

Letter Three/Four: these letters will be issued if the debtor fails to pay and the process has not been stopped. These letters will notify your debtor of our intention to refer this matter to a solicitor to commence litigation. The debtor will also be given a final opportunity to settle the debt. If the debtor still fails to settle and you would like to instruct litigation, MTA Solicitors will then proceed to court on your behalf.


What happens next?

Once your case has been referred to one of our debt recovery solicitors at MTA Solicitors, we will contact you to discuss fees in pursuing your claim. At MTA Solicitors we offer fixed fees which are dependent on the value of the debt. For a breakdown of fees click here.

If you decide to proceed with litigation, your file handler at MTA Solicitors will write to the defendant confirming our instruction to litigate. Court proceedings will then be drafted on your behalf. A copy of the county court claim will then be sent to you for signing before being sent to court.

For further information and advice simply call us on 0208 437 0731 to speak with one of our commercial debt advisors.