The Importance of Acting Fast in Debt Recovery
As a person or company who is owed money you have six years from the date a debt is owed to pursue legal action in order to retrieve it. Once this time is up, a debtor cannot be legally forced to pay you the sum of money owed.
Making your debtor aware as soon as possible
If a payment is not made within the days given in your credit terms, it is best to immediately inform the debtor that they have an outstanding amount owed. This means that if they have only forgotten about it in the short term, you may get paid. If you do not act immediately, the debtor may forget about the payment, as well as you, and it could become “statute-barred” meaning you cannot legally force them to pay your debt.
Move to the next step quickly.
If you believe the debtor is ignoring your payment requests, then you should think about moving one step further and contacting a debt recovery solicitor to have a pre legal demand letter issued. This demand letter will state the sum of money owed to you and will notify your debtor of your intention to issue legal proceedings to recover the debt from them. At Carlisle Solicitors, we recommend setting a notice period of 7 days in your demand letter. This means that if the debt is not paid within 7 days then you will proceed to legal action against them. The demand letter will also inform the debtor of your intention to recoup legal costs and interest from them if they do not pay within 7 days of receipt of it. Again it is important that this is done sooner rather than later as the faster you act, the more likely you are to receive the debt owed to you.
Taking Legal Action.
In the outcome of having to pursue legal action and go to court, acting quickly is an important factor in strengthening your case. The older a debt becomes the information available surrounding it may decrease (invoices going missing etc.) Legal costs involved for older debt collection cases are usually higher too. The newer your case is can make the decision easier for the judge. With older cases they may take into consideration why it has been left until then, therefore making the case longer and possibly more expensive.
Risk of not acting immediately
If a company does not pay you then this could mean that they are struggling to pay outstanding debts. This often ends up in the company filing for bankruptcy or going into liquidity, meaning they cannot afford to pay any debts they owe and the business ultimately comes to an end. Therefore, leaving an outstanding debt more than the terms of payment could result in this happening to a creditor, which would mean you would not receive the money owed to you.
High vs Low DSO
By acting quickly to retrieve a debt you could improve your DSO (day sales outstanding). This is a financial calculation that helps a company determine the number of days on average it takes for them to collect payment from credit sales of the business. As a business you ideally want to have an efficient cash flow, so DSO is used to measure the liquidity of the business. High DSO may suggest you are having difficulty getting paid, and this is something a business will want to assess and sort out. The faster you engage in debt recovery, the better the cash flow.
IT PAYS TO GET IN TOUCH
If you are finding it difficult to recover a business debt, then it may be necessary to start your journey on the debt recovery process with the help of a solicitor. Carlisle Solicitors will guide you through the debt recovery process and you will benefit from our 30 years of experience of the debt recovery process. This experience can help to try and recover your debt fast and efficiently.
Browse through your debt recovery options below and, of course, feel free to call us on +353 (0) 1 653 3370 or email law@carlislesolicitors.ie and we will do our very best to ensure that you get paid faster!
