Is Debt Recovery Cost Effective for Businesses?

May 16, 2023

If your company is owed money, and you are struggling to secure payments from your debtors, the experience can be stressful, quickly having an adverse effect on your finances, interfering with your productivity and day-to-day projects.

Whilst many businesses understand that professional debt recovery processes are an option, for example, working with a specialist debt collection solicitor, some companies are concerned about how cost-effective professional debt recovery processes are.

In this article we’ll discuss the debt recovery support that lawyers can offer to businesses, including how cost-efficient these services are, as well as the benefits of debt recovery procedures.

Is debt recovery cost effective for businesses?

To examine whether or not professional debt recovery, such as working with debt recovery lawyers, is a cost-effective option for companies, it is necessary to look at the alternative options for debt collection.

If your business does not choose to work with a debt recovery solicitor, you’ll be tasked with facilitating your own debt recovery procedures in-house. Whilst in-house debt recovery is a potential option, there are several disadvantages of using this method. For instance, this route can be complicated, involving various time-consuming administrative processes which have a tendency to drain your resources, and consequently, your finances.

In comparison, debt recovery legal services can save businesses time, avoiding interruption to their daily operations, and therefore, offering a more cost-effective solution. Additionally, it is often possible for businesses to access debt legal recovery services on a fixed fee basis.

Where in-house debt recovery processes are executed incorrectly, businesses can end up losing money. With the help of debt recovery experts, companies can ensure that debt recovery is facilitated correctly, and without setbacks. Debt recovery legal services can help companies to access cost efficient support, to protect their financial interests.

How do debt recovery solicitors help businesses?

Working with a solicitor can help businesses to recover debts, in the first instance, by issuing the debtor with a Letter of Claim. The Letter of Claim is used to establish how much is owed, when payment should be made, and what legal action will be taken should the debtor not make a payment.

Debtors usually have a 14-day period to make a payment before Court proceedings are issued against them.

Where a debt remains unpaid ongoing, lawyers can assist businesses to enforce various judgments, including:

• Attachment of Earnings Order: Meaning that the debt is repaid by making monthly deductions from the debtor’s salary.
• Charging Order: Meaning that the debt is secured against a property that the debtor owns, most often their home.
• Statutory Demand: Where the debtor is required to pay the money owed, or else bankruptcy or winding up proceedings will be issued against them.
• Warrant of execution: County Court Bailiffs are given permission to all part of the debtors property, so that the debt is repaid.

What are the other benefits of debt recovery for businesses?

Besides offering a cost-effective solution to save money, there are several other benefits of debt recovery for businesses, including:

Higher likelihood of debt recovery

Simply receiving a letter of claim from a solicitor regarding the debt can improve the likelihood that the debtor will pay. Receiving official legal documentation regarding the claim adds a sense of formality and seriousness, particularly where potential Court action is referenced.

As a business, you may have limited options for debt recovery. When working with a debt recovery solicitor, if the debtor fails to make a payment after receiving a Letter of Claim, a solicitor can help you to pursue your claim in Court.

Help to protect business relationships

Not all debt recovery cases escalate to the point where the relationship breaks down. Many instances of debt recovery can be solved relatively quickly.

Where you need to recover debt from a client, yet are keen to keep the working relationship intact, working with debt collection solicitors can help you to do so. Working with a third party can help to keep debt collection matters separate to your ongoing business dealings with that client.

Regulatory support

When approaching debt recovery, there are various regulatory and compliance processes that should be followed. Unless you have an understanding of these, you could unintentionally end up breaching regulations.

Working with debt recovery lawyers can help you to ensure that the correct procedures are followed when chasing debts.

For further information get in touch with our debt recovery solicitors

To discuss legal support with debt recovery, please get in touch with us at Tayntons. You can call us on  01452 522047 or email  info@tayntons.co.uk.