Jan 12 2006
A survey among UK companies by the Better Payment Practice Group (BPPG) has found that three in ten have been to court in the last year to collect outstanding debts from business customers.

The poll, which was held on the BPPG’s website, www.payontime.co.uk, during December, asked businesses if they had been to court in the last year to collect payment. Of the 292 respondents, 31% had been to court in the last 12 months.

Clive Lewis, Head of SME Issues at the Institute of Chartered Accountants in England and Wales and member of the BPPG, said, “Going to court can be an effective method of recovering money owed, but it can also be expensive, stressful and time-consuming and should be seen as a last resort. Businesses can do a great deal to improve their credit management procedures to avoid bad debts in the first place, such as credit checking new customers, agreeing terms of trade at the outset, invoicing promptly and persistently chasing late payments. If further action is required, then alternatives to court, including employing a collection agent or getting a solicitor who specialises in debt collection to write a strongly worded letter on your behalf, should be considered first.”

He continues, “Where court action really is the only option, then businesses can minimise the chance of any counterclaims by first ensuring that any disputes over the goods or services provided have been resolved. It is also important to make sure that the action is worthwhile by checking that the customer has the means to pay – a credit reference agency will be able to provide a credit rating and details of any unpaid county court judgments.”