Collecting the debts and maintaining cash flow

In these exceptionally difficult times, it is absolutely necessary that your business is equipped with the most effective ways of maintaining cashflow. The most common problem facing many businesses at the moment is that outstanding bills are not being discharged in a timely fashion, or at all. How then do you go about ensuring that this problem is banished from your business? One of the most efficient ways of doing this is by commencing debt collection proceedings against the company or individual. Developing a reputation for being proactive about the collection of fees or invoices owed to you can be no bad thing, as it will foster a culture of immediate payment by your clients because they will be aware that if they dont pay, you will follow them for it and not simply brush that fee note under the carpet!

What does it mean to 'commence' debt collection proceedings and what does it entail?

Step 1 is to contact your solicitor and advise:

The amount of the oustanding invoice (the amount determines whether the matter is brought in the District, Circuit or High Court )

Who owes the invoice?

Whether you have previously requested payment?

Once those details have been passed on to your solicitor they will commence the process on your behalf. Essentially, a seven-day demand letter is sent to the individual. If they respond straightaway with payment, fantastic. If payment is not made at this stage, the next step of the process is to issue legal proceedings against the debtor. Once the proceedings have been issued by the courts, they must be sent to the debtor. The debtor is then given a period of roughly 10 days within which to respond to the claim made by you. If they do not respond, you can proceed immediately to obtain a Judgment against them, which means that you obtain a court document stating that they owe you the sum due and you can now proceed to enforce the matter against them. Do not despair if they have failed to pay by this stage, you still have many effective options open to you.

What does enforcement of a Judgment mean? There are many ways in which to enforce a judgment, namely:

Registration and publication (the debt is published in Stubbs Gazette which is a trade gazette read by most businesses. The implication of this method of enforcement is that other businesses may refuse to trade with the debtor as they may now be seen as an individual who will not pay their business debts.

Send the judgment to the sheriff: this means that the sheriff goes out to the debtor and tries to recover goods to the value of the debt due/payment from the debtor. If the sheriff seizes goods they will liquidate them on your behalf and you will receive the proceeds.

Register the debt as a mortgage on property owned by the debtor. This can be very effective as the debtor has to deal with the debt if he/she wants to dispose of the property. It is a cast-iron way of securing your interest in the debt, provided of course the property has not been mortgaged to the extent that your debt could not be paid out of the proceeds of sale.

Obtain an instalment order against the debtor. If you decide to go down this route you apply to the District Court for either a lump sum payment of the debt owing or that it be paid in monthly instalments. If the debtor fails to pay under this order he can later be committed to prison.

Bankruptcy: Bankrupting a debtor is a serious process and should only be utilised for high value debts where there is no reasonable prospect of recovery by any other method.

What does all of this cost?

The cost of the debt collection process depends on the size of the debt (as commission is charged on the basis of the amount due ), at what stage in the process the debt is collected and the complexity of the case.

How long will this take? Again, that depends on how complex the matter is. However, we generally obtain Judgments within roughly eight weeks of issuing the seven day demand letter. As for the further methods of enforcement, we would hope to have the matter brought to a successful conclusion for you within about six months, provided everything goes according to plan.

Cazabon Solicitors would be happy to discuss your debt recovery queries with you at any time and come up with a proposed plan for the recovery of monies owed to you. Contact them at (091 ) 507070 for a quotation.

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