Most businesses are affected by outstanding debts in these difficult times, none more so than those within the construction industry. With late or non-payment of debts costing UK business £20bn per year and, at any given point, nearly 50% of all invoices overdue, cash flow can become a real driver for survival.
Whilst some contentious outstanding debts are perhaps more difficult and time consuming to pursue, others may be simpler and can simply be lost sight of through the passage of time.
Payment of the final balance of retention is one obvious example. This is often due 6 months, 1 year or sometimes even longer after completion. By then, the focus has shifted on to new jobs and pursuing recovery may be overlooked. In two recent high profile administrations "lost" retentions are thought to have amounted to as much as £20 million.
In tough times, it may pay dividends to look once more at completed jobs to check if there are unpaid balances still due and, if so, to pursue them.
The overriding objective in any debt recovery process is to proceed quickly to maximise the chances of recovering money in an economical way. This necessarily involves taking the recovery action which is appropriate to the circumstances, and then selecting the methods of enforcement which are most effective in those circumstances.
Options available include demand letters, statutory demands and abbreviated forms of these and, if necessary, court action. There can be an automatic entitlement to interest. The decision on the route to follow will depend on a number of factors including whether a debt has simply been overlooked and the debtor just needs a prod to secure payment, or whether the debtor is playing hard to get in which case more aggressive tactics may be required.
MacRoberts offer a case management system for handling all our clients' debt recovery needs. Key features of this service are:
- Demand letters are issued for a flat fee of £10 plus VAT, irrespective of size of the debt.
- Discount available for bulk instructions.
- Low cost fees for other undefended matters.
We also have a recognised market-leading team of specialist construction lawyers to deal with more complex construction issues.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
