Effective Debt Recovery Strategies: Insights from PCL Lawyers
Welcome back to the PCL Lawyers blog, where we continue to share expert insights to help you manage your business effectively. In this post, Roland Müller, an accredited specialist in commercial litigation and a partner at PCL Lawyers, provides valuable guidance on dealing with debt recovery, particularly when faced with disputes over the quality of goods or services provided.
Navigating Disputes Over Goods or Services
One of the most common challenges in debt recovery arises when a client disputes the quality of the goods or services they received. Roland explains that while negotiation often resolves these issues, sometimes legal action is necessary. Legal proceedings may be needed where a late-breaking complaint about quality or suitability seems to be made solely to avoid or delay making payment. It's important to remember that just because a client is unhappy with a service doesn't mean they are exempt from paying for it in part or full.
The legal obligation to pay remains and if the matter escalates, it may be taken to a court or tribunal for resolution.
Listen to the Podcast now with Roland Muller, Accredited Specialist in Litigation:
The Legal Process of Debt Recovery: What to Expect When You Sue
If negotiations fail you may decide to pursue legal action through a court or tribunal process. To initiate legal action your lawyer begins with gathering detailed information to support your claim.
This information is used to draft documents such as a writ or complaint and statement of claim, which are then filed with the court and served on the debtor.
Once the claim is filed and served, the debtor has the opportunity to respond, either by filing a defence, negotiating a settlement, or they might ignore the claim. Ignoring the claim can lead to a default judgment in your favour. If the case proceeds to court, mediation or other dispute resolution methods may be part of the process, but if these fail, a judge will make a final decision based on the evidence.
Weighing the Costs: Is It Worth Suing?
For many businesses, one of the key considerations in debt recovery is the cost-benefit analysis of pursuing legal action. Roland emphasises the importance of obtaining the right legal advice. The advice should help you to understand the legal and strategic considerations so you can make a sound commercial decision on how to proceed with your case, in light of the likely outcomes.
An experienced litigation lawyer can help you evaluate the potential risks and benefits of litigation, along with the likelihood of recovering the debt and any associated legal costs. For business owners, there are other considerations beyond the financial aspect as pursuing a debt can also send a strong message to other clients that you take your business commitments seriously and expect the same in return. This can have long-term impacts for your reputation and encourage respectful business relationships in the future.
Statutory Demands in Debt Recovery
For undisputed debts, a statutory demand can be a powerful tool. Roland explains that a statutory demand is a formal request for payment that, if ignored, allows you to apply for a court order to wind up the debtor's company and appoint a liquidator. The liquidator then uses the company's assets to pay creditors, including you.
However, it's crucial to use statutory demands carefully, as they are only suitable in certain circumstances. If a debtor successfully challenges the demand in court, you could be liable for their legal costs. Therefore, always seek quality legal advice before issuing a statutory demand to ensure it is the appropriate course of action.
Tailoring Debt Recovery to Your Business Objectives
Every business has different tolerances for late payments and varying reasons for pursuing debt recovery. Debt recovery should always be a tailored process that aligns with your specific business objectives and operations. Engaging a lawyer for debt recovery does not necessarily mean court proceedings; often times agreements are reached before a matter reaches court.
Working closely with your lawyer and accountant to assess the best strategy can help you manage cash flow, maintain healthy business relationships, and establish a reputation as a serious and reliable player in your industry.
Getting Quality Legal Advice on Debt Recovery Litigation
As debt recovery can be a complex and nuanced process, it requires a strategic approach. With the right legal advice, you can navigate disputes, pursue legal action when necessary and prevent future disputes with confidence.
At PCL Lawyers, our experienced team is here to help you recover what you're owed and protect your business interests, no matter the size and complexity of the debt you have.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
