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Debt Collection Solicitors

DEBT COLLECTION SOLICITORS

Debt collection solicitors are expert legal practitioners that specialise in debt recovery and the process of converting unpaid invoices into cash.

On this page of our website, you can find out more about:

  • The importance of cash.
  • Establishing an effective system of credit management.
  • Getting to know your customer.
  • Credit application forms.
  • Credit reports.
  • Bank and/or trade references.
  • Legally binding contracts.
  • Instructing debt collection solicitors.
  • How debt collection solicitors can help.
  • The benefits of instructing debt collection solicitors.
  • Choosing a debt collection solicitor.

Before we start, this page of our website assumes that you a newcomer when it comes to instructing debt collection solicitors.  If you already know a lot about this subject matter and simply wish to instruct a debt collection solicitor today, you can go straight to the open an account page on our website. 

If you require further in-depth information, please keep reading.

THE IMPORTANCE OF CASH

Cash is of critical importance to every business because it can often mean the difference between success and failure.  Unfortunately, many businesses fail to appreciate the importance of maintaining a robust system of credit control and collecting unpaid debts and instead focus most of their attentions on a desire to increase sales and turnover. 

The net result is that they fail to understand the impact their approach to credit management is having upon the culture of their business and ultimately, its profitability.  Unpaid debts cause cash flow problems and can ultimately lead to a business being unable to pay its day-to-day liabilities as they fall due.  The inevitable result is that a business will become insolvent if it does not do something to address its shortcomings.

ESTABLISHING AN EFFECTIVE SYSTEM OF CREDIT MANAGEMENT

Shortcomings in credit control and collecting unpaid debts can be addressed by installing an effective system of credit management.  There are a number of elements to this, including getting to know your customer, credit application forms, credit reports, bank references, trade references and entering into legally binding contracts.

The purpose of these steps is to help you carry out a risk assessment of a prospective customer and ultimately, assess its creditworthiness.  In other words, its ability to pay the invoices you render.

Following that initial due diligence, it is vitally important that a business imposes its terms and conditions of sale upon its customer and then follows this up with a structured approach to credit control and collecting unpaid debts. 

A structured approach to credit control, to include outsourcing legal action to a reputable firm of debt collection solicitors can help to eliminate excuses for late payment from unreliable customers and identify persistent, professional debtors.  We will now look at each of these elements of installing an effective system of credit management in turn.

GETTING TO KNOW YOUR CUSTOMER

Getting to know a customer is the responsibility of every employee a business has.  Prior to an appointment with a prospective new customer, every sales executive should take the time to conduct an initial review of the business to which they are looking to sell.  This might include visiting its website, searching for online reviews and checking its filing records at Companies House in order to gain an initial impression of the size of the customer and identify any warning signs that might make the sale of goods and/or services without payment up front a risk not worth taking. 

CREDIT APPLICATION FORMS

Following those initial enquiries, a sales person ought to ask every new customer to complete a credit application form.  A well drafted credit application form will often gather together a wealth of information.

At this point, it makes good sense to highlight the importance of finding out the legal status of a new customer.  Typically, every new customer will either be a sole trader, a partnership or a limited company.

OBTAINING INFORMATION ABOUT SOLE TRADERS

For a new customer that is a sole trader, a credit application form should capture the following details:

  • The full, unabbrieviated name of the principal.
  • The date of birth of the principal.
  • The full residential address and postcode of the principal.
  • The telephone number and e-mail address of the principal.
  • The ownership status of the principal’s residential address (owned, rented or leased).
  • The trading style of the business.
  • The full trading address and postcode of the business.
  • The telephone number and e-mail address of the business.
  • The ownership status of the business’s trading address (owned, rented or leased).
  • The name and address of the business’s bank.
  • The account number and sort code of the business’s bank.
  • The name and address of an organisation that is able to provide a trade reference.

OBTAINING INFORMATION FROM PARTNERSHIPS

For a new customer that is a partnership, a credit application form should capture the following details:

  • The full, unabbrieviated name of the partners.
  • The dates of birth of the partners.
  • The full residential addresses and postcodes of the partners.
  • The telephone numbers and e-mail addresses of the partners.
  • The ownership status of the partner’s residential addresses (owned, rented or leased).
  • The trading style of the business.
  • The full trading address and postcode of the business.
  • The telephone number and e-mail address of the business.
  • The ownership status of the business’s trading address (owned, rented or leased).
  • The name and address of the business’s bank.
  • The account number and sort code of the business’s bank.
  • The name and address of an organisation that is able to provide a trade reference.

OBTAINING INFORMATION ABOUT LIMITED COMPANIES

For a new customer that is a limited company, a credit application form should capture the following details:

  • The full, unabbrieviated names of the directors.
  • The dates of birth of the directors.
  • The full residential addresses and postcodes of the directors.
  • The telephone numbers and e-mail addresses of the directors.
  • The ownership status of the directors’s residential addresses (owned, rented or leased).
  • The full, unabbreviated name of the company.
  • The trading style of the company (if different).
  • The full trading address and postcode of the company.
  • The telephone number and e-mail address of the company.
  • The ownership status of the company’s trading address (owned, rented or leased).
  • The name and address of the company’s bank.
  • The account number and sort code of the company’s bank.
  • The name and address of an organisation that is able to provide a trade reference.

In some instances, it might be appropriate to ask a company director for a personal guarantee.  In other words, a guarantee that the director will unconditionally ensure due and punctual performance and observance by the company of its obligations under the terms and conditions of the business granting a credit facility.

Well worded personal guarantees will also incorporate an agreement that the director will agree to indemnify the business granting credit against any breach or non-observance a business’s terms and conditions.

CREDIT REPORTS

When a prospective customer has completed a credit application form, a sales executive should pass the form to his or colleague(s) with ultimate responsibility for granting a credit facility.  In large organisations, this will often be credit manager or credit control manager and in smaller organisation this will commonly be a business owner, a director or a line manager. 

The next step that must be taken is to obtain a credit report from one of the 3 main credit referencing agencies.  These are Experian, Equifax and Call Credit. 

A report from a credit referencing agency will commonly provide you with an overall credit score, from which you can make a decision as to whether credit should be granted and if so, how much. 

The approach of many successful companies is to grant an initial credit limit that is small and the increase it in small increments as a customer proves it is reliable and worthy of your trust. 

BANK AND/OR TRADE REFERENCES

Additional steps some businesses take during the risk assessment process are to ask for bank and/or trade references and where the amount of credit being granted is significant, credit insurance.

LEGALLY BINDING CONTRACTS

When all of the above mentioned steps have been carried out, it is of fundamental importance that you present your new customer with your standard contractual documentation.  Whilst a legally binding contract does not always have to be in writing, recording the terms on which you are willing to trade can help to protect against future problems.

INSTRUCTING DEBT COLLECTION SOLICITORS

When internal attempts to collect an unpaid debt have been exhausted, it makes great sense to outsource collection to a well established firm of debt collection solicitors. 

The benefits of outsourcing collection of a debt to a debt collection solicitor are clear.  Outsourcing will enable you to focus on your core business activities.  It will improve efficiency.  It will help you to cut costs, make savings and it will give you an important advantage over your competitors.

Instructing debt collection solicitors does not have to be complicated.  It’s quite easy, when you know how.

In the following paragraphs, we will attempt to show you how debt collection solicitors can help, the benefits of instructing debt collection solicitors and provide you with tips on how to choose a debt collection solicitor.

HOW DEBT COLLECTION SOLICITORS CAN HELP

Debt collection solicitors can help you to undertake a variety of tasks.  They can send a letter before action, a late payment letter or a pre-action protocol letter on your behalf.  They can help you to issue court action.  Finally, they can advise you on the various methods of enforcement action that are available if you obtain a judgment (CCJ) against the individual or organisation that owes you money. 

The ultimate aim of all of these processes is to force your customer to pay you as soon as possible and at minimal cost.

We will now go on to outline the benefits of instructing debt collection solicitors.

THE BENEFITS OF INSTRUCTING DEBT COLLECTION SOLICITORS

Instructing a well established firm of debt collection solicitors can deliver many benefits.  The obvious ones can be summarised, as follows: 

1. DEBT COLLECTION SOLICITORS CAN SAVE YOU TIME

Time is money.  It is also the most important commodity to any person engaged in the running of a business.  Debt collection solicitors can save you time because they can take on day-to-day responsibility for collecting unpaid debts on your behalf.  Persuading customers to pay unpaid invoices is time consuming and it can reduce the amount of time you have available to work on your business and increase it profitability.

2. DEBT COLLECTION SOLICITORS CAN SAVE YOU MONEY

Outsourcing collection of a debt to a firm of debt collection solicitors can save you money in that you will not be required to pay an employee to deal with the problem.  Instructing debt collection solicitors as and when you need them will also allow you to budget and set limits on the amount of money you are willing to spend in pursuit of an unpaid debt.

3. DEBT COLLECTION SOLICITORS CAN GIVE YOU PEACE OF MIND

By instructing debt collection solicitors, you can gain peace of mind – safe in the knowledge that you will now be receiving help from an expert.  If a particular problem with an unpaid debt has been keeping you awake at night, a debt collection solicitor can take that weight off your shoulders.  As the saying goes, “a problem shared is a problem halved”.

CHOOSING A DEBT COLLECTION SOLICITOR

When choosing a debt collection solicitor, you should consider the following matters:

1. MAKE SURE YOUR DEBT COLLECTION SOLICITOR IS REGULATED

All debt collection solicitors must be regulated by the Solicitors Regulation Authority.  You can check if a firm of debt collection solicitors is regulated by visiting The Law Society’s ‘Find a Solicitor‘ website.

The Law Society’s Find a Solicitor website is a very useful resource providing businesses and members of the public with vital information about debt collection solicitors.  For example, the website allows you to find out a firm’s SRA number.  It also gives contact details, information about areas of practice, office facilities and the people employed by that organisation.

Debt collection solicitors must adhere to a strict set of professional rules, namely the SRA Standards and Regulations (including the SRA Codes of Conduct).

2. CHOOSE A SPECIALIST DEBT COLLECTION SOLICITOR

Using specialist debt collection solicitors as opposed to general practitioners will typically improve your prospects of success.  Specialist debt collection solicitors will have the expert knowledge to deal with difficult situations and tricky legal problems.

3. CHOOSE A FIXED FEE DEBT COLLECTION SOLICITOR

Fixed fee debt collection solicitors will, in many cases, work out cheaper than solicitors who charge in accordance with the amount of time they spend working on a case.  You will find out how much money you are likely to spend at the start of your case and there are unlikely to be any unexpected bills you had not budgeted for.

All debt collection solicitors are subject to the Solicitors Regulation Authority’s Price Transparency Rules.  Consequently, with effect from 6 December 2018, all solicitors have been required to publish details of their prices in certain areas of law, including the work of debt collection solicitors.

As a result, debt collection solicitors must:

  • Provide a total cost and if this is not possible, provide an average range of costs.
  • Explain the basis of their charges, including any hourly rate or fixed fees.
  • Highlight likely disbursements and their cost.
  • Be clear of whether VAT is added.
  • For conditional or damage-based fees, explain when clients may have to make payment.

4. CHOOSE A DEBT COLLECTION SOLICITOR WITH A GOOD REPUTATION

It goes without saying that you should choose a debt collection solicitor with a good reputation because past performance is often a useful indicator of future results.

A simple search of Google should highlight any adverse news stories and a firm’s Google Business Profile will often display reviews from customers and clients who have first hand experience of utilising a firm’s services.  In addition to Google reviews, many debt collection solicitors now have Trust Pilot ratings or ratings on other directory websites.

Successful firms will often also have been commended for their excellent work with awards from industry bodies and testimonials from happy clients.  Case studies also provide an illuminating insight into a debt collection solicitor’s methods of working and approach to recovering payment of unpaid debts.

5. CHOOSE A DEBT COLLECTION SOLICITOR YOU CAN TRUST

In a solicitor/client relationship, trust is everything.  When choosing a debt collection solicitor, you should, therefore, find an individual or a firm that you can rely upon to act in your best interests and the best interests of your business.  A debt collection solicitor you can trust will provide you with honest and commercially focused advice that is designed to deliver the best possible results in the individual circumstances of your case.

Please note: to access our services, you will need to open an account.  You can do this by completing the form on the open an account page of our website.  On receipt of your application, we will set you up as a debt recovery client and then contact you to explain what will happen next.  Alternatively, for general enquiries, please contact us.  If you would like to speak to one of our advisors, please call: 0151 650 6908.  We very much look forward to working with you.

If you would like any further information about our services, you can find out more by clicking on the following link – which will take you to our main debt recovery page.