Ask owners of small Jersey businesses what frustrates them most and the chances are they will tell you it is the customers who do not pay on time. Late payment is a significant issue for small firms. It is not just time consuming trying to get money out of people – for a small firm, it can be a matter of life and death.
So how can you get customers to pay without delay? The first step is to make sure there is nothing preventing payment. Find out whether it is simply an administrative error. Is there an issue about whether they have received the invoice? Did they receive the goods? Is there an argument about the standard of service they have received?
If there is a genuine dispute about the service or product, or the amount charged, it needs to be resolved before any further action is taken.
The next step can be as simple as making a call to somebody in the credit control department who has not realised your invoice has been pushed to the bottom of the pile. If that does not work see if there is somebody you could contact at a more senior level.
If phone calls do not get you anywhere a formal letter on headed notepaper – from your firm’s credit control department or from Benest & Syvret – often produces results. This is called a letter before action and gives the customer a last chance to pay before things get serious.
Often this flushes out those people who are trying to buy a bit of time. A solicitor’s letter will help you move up the pecking order because the customer knows he can not just ignore it. Also, it shows that you are taking this seriously and so are likely to take further action if they do not pay.
You might want to point out in the letter that you are entitled to recover fixed costs relating to the proceedings over and above the amount of the debt. This may encourage reluctant payers to engage.
When it comes to excuses our clients have heard them all. Explanations from customers have included: the person responsible for signing the cheques is on holiday; the accounts department has no direct phone line and can only be contacted by email; and someone new has joined the company and because she is unfamiliar with the systems it is unclear which bills she has and has not paid.
If polite tactics do not work and there is no prospect of negotiation, the next step will be to consider debt recovery proceedings.
We recommend that you should not begin legal action for non-payment unless you are reasonably certain the other side has the money to pay. If there is any suggestion of them facing insolvency or bankruptcy, then any action will need careful consideration.
You also need to be aware that even if the Court finds in your favour it will not pursue the money for you. You have to enforce the judgment through the Viscount’s Department and if the other side is unable to pay you could find yourself no better off – or back in Court.
If you are owed less than £30,000 you can go through the Petty Debts Court. For unpaid bills over £30,000 claims must be issued in the Royal Court.
If your customers disputes the claim, however, a hearing will be held at which each side will present their case to a judge.
Please contact our team to discuss your individual requirements.