Debt Management During COVID-19

By Rebecca Antill

Solicitor

During these uncertain times and the current situation we all facing, it has become even more apparent for businesses to keep on top of their financial situation, along with ensuring there is sufficient cash flow to avoid the risk of going under.

Since the lockdown implemented by the Government on 23 March 2020 businesses have faced increased difficulties, with decreased demand and many employees working from home.

Whilst there is financial help available from the Government which is helping businesses in the short term, it is inevitable that businesses may struggle to recover in the long term. It is therefore of paramount importance that businesses assess their current financial situation and look to resolve any issues with debtors that may be ongoing and to seek to collect any unpaid invoices which are exceeding their due date.

This article provides guidance as to how you can seek to recover your debts by legal means. We can help you with this through our fixed fee debt recovery service. The fees for assisting you recover debts are set out here.

We offer this service for non-complex debt recovery work based on the non-payment of invoices up to a total of £100,000 where a dispute has not already arisen. If you have a case which is more complex then please do get in contact and we will be able to provide you with more specific costs information where a substantial dispute has already arisen.

The first step is to send a Letter of Claim to demand payment. This is a requirement of the court’s rules before issuing a claim and can result in invoices being paid.

Before proceedings are issued it might be preferable to seek to negotiate with the debtor depending the circumstance of each case and this will help to reduce costs. We can assist you with this having reviewed the relevant documentation.

If there is no response to the Letter of Claim or the full amount has not be paid, you can consider issuing a claim to recover the sums due by issuing a claim in court. Another option would be to serve the debtor with a statutory demand before filing a bankruptcy or winding up petition.

Unfortunately as a result of COVID-19 much disruption has been caused to the Court timetable with hearings being conducted via telephone or video and in some cases adjourned. The most essential cases are being prioritised and therefore any claims issued could take longer during this period but you can start to commence proceedings and doing so can put pressure on a debtor to make payment. If proceedings have to be issued then filing a claim sooner will avoid your claim being at the back of the queue when things return to normal.

If your business currently has concerns with regard to cash flow and has invoices that are yet to be paid, and you require advice, please contact our Commercial and Property Litigation Team on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.