Chasing Bad Debts

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ryanline79

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I'm involved with a small service business and we have some outstanding debts. Currently small but going forward I was wondering how best to address them.

We have sent out a (soft) letter looking for payment within 7 days and have received no response.

I was wondering is the next thing to do send a letter and say we will be start charging interest if not paid in 14 days as per this link [broken link removed] ?

Ive done a few searches online to look for how other businesses deal with it but doesn't seem to be much online.

Any help would be great, thanks.
 
Hi

Usually threatening to charge interest does not make any difference.

Nor does sending soft letters unfortunately. If you have identified them as slow payers then you need to take more decisive action.

Either telephone them and try to establish what the problem is and when you expect to be paid and ring them back if the money does not arrive at the time agreed.

Most importantly if you say that you are going to take a course of action it is very important that you actually do what you say. Otherwise they will not take you seriously and you will continue to be viewed as a soft touch.

It is the aspect of the business that I hate.

Hope this helps

capnhand
 
Those that shout the loudest get paid.

Call around to them and meet them face to face. Keep calling around to them and make yourself a complete nuisance.
 
This is how we are dealing with a recent bad debt.

If badgering doesn't work, send a 7 day letter. If that passes, send another letter stating that the issue has been transferred to your solicitors, and say that any correspondence should pass through them (give name and address). Wait another 7 days or so and get your solicitor to send a letter (about 150 euros plus VAT or so). If this passes without response or adequate response, get a summons drafted by your solicitors. The other party will then be given a date by which they must defend it or accept it. If no response after this date, go hell for leather and get a judgement.

I'm at the judgement stage at present with mine.

Good luck with it.
 
For small debts using the courts is going to cost you more than you would ever hope to recover.

Also some people collect judgements like they collect stamps. They just don't care.
 
Thanks to everyone for there advice above - the biggest bad debt we have currently is in the region of €300 so I couldn't see there being much point of getting a solicitors letter drafted.

How do you treat bad debts in terms of your tax accounts? Can you write them off like you would an expense?
 
I believe you can write them off eventually. I did see it mentioned before that you need a judgement to have if officially written off.
 
Written off like an expense usually, but you do need to notify the debtor in order to account for the VAT if they are a company. This bit drives me mad.
 
Start with phone calls to all the debtors, but follow up, ask them to send in say 50 Euros on the 300 Euro debt, if you break it into smaller amounts that people can get a handle on you have a better chance. After phone calls, then personal visit, and try not to leave unless you get a cheque or some cash etc.
 
Thanks to everyone for their advice. Thankfully its the situation is not too bad currently but just wanted to have something in place.

We are lucky in that we have a credit card machine, its hard for people then to say they haven't any cash or similar excuses.
 
I have a draft civil bill which i send, "draft" is written very small.
I post this off making a note of the date etc.
I wait 7 days.
70% of the time I get paid.
For those that dont pay, I get my civil bill stamped in the courts and sent off by registered post. Between swearing, stamping and registered letter 'bout 40 quid.
After that just get on with your life, unless you want to super glue their locks.........which I would not recommend.........
 
Bad debts can be written off using an internal credit note. Write on the credit note the reason i.e. no response for 3 months, debt over 90 days, company in liquidation, etc. If you account for VAT on an invoice basis this is of huge cashflow benefit. Revenue may request copies of the credit notes, esp. if your VAT goes into a repayment situation.

You can still chase the debt and if you receive it, invoice it again (to reverse the credit note).

I have seen companies set up a second ledger code for the debtor and post the credit note there. That way they can keep chasing the debtor with statements from the system. Ledger does get a bit messy though!
 
25euronote said:
For those that dont pay, I get my civil bill stamped in the courts and sent off by registered post. Between swearing, stamping and registered letter 'bout 40 quid.
Click to expand...

How long from then before you get a court date, and what happens? Do you stand up in court yourself?
 
oh, and yes, i do stand up myself.
i have adopted the atitude, "if you dont pay me - you will have to pay a solicitor - your own."
if i get the impression that im getting nowhere, i just try to keep the corrospondance going longer and longer, every solicitors letter will cost the otherside money and time.
 
Really?

Many use solicitors letters as firelighters and toilet paper.
 
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