Need some advice?
For many Small Businesses Debt Problems can be a problem, but what are the best options in Debt Collection?
The important thing to remember in a debt collection process is that it is vital to establish as much information about the debtor, most importantly the/their finances. Unfortunately if the person or business that actually owe you or your business money have any assets or income? This could be something important in ascertaining if you get paid in full or even at all. Ideally it should have been clear when you took the job on, and of whom you were contracting with – private individual, sole trader, partnership, limited liability partnership (LLP) or a limiter company (Ltd).
If you are owed money, here is what to consider
If you are owed money by an individual your claim is against that person; if it is owed by a sole trader or partnership, your cause of action is against the individual(s) trading as the business name; and if it a limited company or LLP, your claim would be against that Ltd company or LLP. A limited company/LLP is a separate legal entity from the people who own or run it, and they are not generally personally liable, except in very limited cases. For example if they guarantee a loan through the company to the bank.
Unluckily for any small business, there is never any guarantee you or your business will get paid, even if you have a watertight case. This is just what every new or old business has to deal with in this current world of companies in the UK. We suggest to think carefully about how you are going to pursuer your bad debt, considering the amount of monies owed (plus the cost of your time) and where the finances of the debtor currently stand. There can also be the massive risk of throwing more and more money after bad, strongly think about whether you can actually retrieve any monies at all.
Top Tips of Bad Debts
To sum things up, your options as a business are: 1.) Taking County Court action. 2.) Threatening and pursuing Insolvency proceedings if the debt is more than £750 and not disputed (Bankruptcy for individual/businesses, Liquidation for Limited Companies). 3.) Calling in a debt collection agency.
If you are a thinking about setting up a business, we highly suggest looking through our website for our top tips of running and building a business, and of course the financial side always comes into play, as you have read in here.
