David Asker from the Sheriff’s Office kicked off day two of the business show with a talk on recovering debts using high court enforcement.
Cash flow is king to businesses, and when debts are not repaid it can be damaging to SMEs.
Prevention is better than cure:
• Understand exactly who you are dealing with
• Check credit ratings
• Check trade references and follow up
• Get bank references
• Keep copies of accounts
• Check ratings regularly
• Know the terms and conditions of your contract
If someone is unhappy with you checking these things, ask yourself why. It’s all fairly simple and easy to check. Never take it for granted that a company has a healthy credit rating – take BHS for example. With the best will in the world, late payments is an issue for SMEs.
All businesses these days can claim interest on late payments, make sure you know how much you are chasing.
Chasing debts
If someone is paying what they owe, send a letter before taking action; this way they can’t claim they didn’t know what was going on. Offer a settlement and inform them you will seek help from a debt recovery agency if the amount remains unpaid. Make sure that your claim for a high court judgement is enforceable, simply things like suing for the correct amount and spelling the debtor’s name correctly.
Starting your claim Visit www.moneyclaim.gov.uk for advice. Court fees will vary according to the debt owed, and the debtor will be given 14 days to respond. If you still don’t receive the money you need to start some sort of enforcement proceedings.
Enforcement options include: third party debt orders, bankruptcy/insolvency, attachment of earnings, charging order, County Court Bailiffs, High Court Enforcement. The advantage of High Court Enforcement is that it’s cheaper, and they only earn a fee when they recover money – they have a real incentive to collect money. However there is a cost of £90 if the money is not recovered.
A High Court Enforcement Officer is an individual authorised by the Ministry of Justice, operating in private companies across England and Wales. They work under the High Court writ of control, which tells them to take control of the debtors goods to the value of the debt. They can recover specific goods, such as machinery or equipment etc.
A County Court judgement can be referred to the High Court if it is more than £600 and no more than six years old – a HCEO can help with forms. When they recover money they have to hold it for 14 days.
Items seized includes things like vehicles and artwork, things with value. Items that cannot be seized include perishable goods, bedding and other necessaries for domestic life and anything clearly belonging to a child. Items are then sold to the highest bidder to repay creditors.
