Running a business comes with many challenges and risks. One challenge is dealing with unpaid invoices and the threat of business debt.
Understanding the different types of business debt
A common business debt is late payments from customers. Late payments can have a significant impact on your cash flow and impact your ability to meet financial obligations. Overdue invoices occur when clients neglect to pay their bills within the agreed timeframe. Overdue invoices can cause a strain on the relationship with clients and cause stress for your company.
How to know whether your debt is worth pursuing
If the same client is late to pay invoices it demonstrates a lack of consideration for the payment terms and could suggest ongoing financial difficulties on their part, in the case it may be worth taking action.
It would help if you considered the impact on your cash flow and overall profit. Unpaid debts can restrict your investment in new opportunities for business. Actively chasing overdue invoices will ensure healthier financial stability.
Knowing whether to outsource your debt recovery
When deciding whether to outsource your debt recovery, there are several factors to consider. It is important to carefully weigh out the factors before making a decision.
Evaluate the success of recovering the debt. Has the debtor shown any willingness to pay the debt from in-house efforts? If the debtor is no longer responding or you have lost contact details, a debt recovery solicitors can assist with tracing your debtor and encourage amicable settlement.
You should consider your relationship with the debtor if they’re a long-standing client who normally pay on time, passing to a debt recovery solicitors will help maintain an amicable relationship with them. This will help minimise the risk of late payments in the future.
Will taking legal action be cost-effective in relation to what you’re owed? Consulting with a lawyer can help determine if legal action is the best option and what outcomes can be expected. STA Legal Ltd offer legal advice with our debt recovery department, all advice is tailored specifically to your case, we will give you an insight on the costs and strategy to increase your chances of successful collection.
Limitation Period in the UK
The Limitation Act 1980 states any legal action on a simple contract must be taken within six years from when the debt was accrued. Meaning any legal action must be taken within six years otherwise it cannot be pursued.
There are some exceptions to this rule where the limitation period may be extended by an acknowledgment of the debt or payment, this will be dependant on the circumstances.
STA Legal Ltd specialises in UK and International debt recovery. If you have overdue debts and are seeking recovery, contact us today.