It is a key function within any business that monies which are owed to it are paid and paid in a timely manner as, if they are not, it can cause serious cash flow issues. Unfortunately, unpaid bills and outstanding invoice payments can happen regularly, and if you are suffering as result, then it may be time to speak to a commercial lawyer to ask them what steps you can take to remedy this problem.
The first step that your commercial lawyer is likely to recommend you take is to for them to send a letter of demand to the person or the business that owes you the debt. Normally this will outline the payment which is due and demand that it is paid within a certain number of days.
You cannot normally claim any costs related to the letter of demand, for example, the fee charged by your commercial or debt recovery lawyer to write and send the letter. However, if there was a clause within the contract for the goods or services the debt relates to that specifically stated that the cost of recovering any debt would be payable, then you can add these costs.
In many cases, a well-crafted letter from your commercial lawyer will be the virtual nudge that the debtor needs to send the payment. They may request that they be allowed to pay in instalments which in most cases you should allow them to do, rather than pursue them for the payment in full , knowing that they are unlikely or unable to pay.
If, despite sending them a letter of demand, the debtor ignores you or does not agree to pay within the time period stated, then your next action is to instruct your commercial lawyer to begin litigation. The initial step in the litigation process is for them to file a claim with the magistrate’s court, or the district court.
Which court will be determined by the amount of the debt which you are pursuing. If it is less than $10,000 it will be deemed a minor case claim, if between $10,000 and $75,000 it is classed as a general procedure claim, and both are these are dealt within the magistrate’s court. If your claim is greater than $75,000 your claim will need to go via the District Court.
In these days of the internet, this claim can be created online, and then it will be emailed to a process server which is a company that prepares and serves legal documents such as affidavits and summons. In this case, the claim you have emailed to the process server will be served on the debtor by them.
This is a much more efficient way of proceeding than the traditional method of using bailiffs which can be prone to delays, and often means you have to generate the relevant legal documents multiple times, which of course will add to the legal costs you are incurring.
If the respective court finds in your favour and orders that the debtor pays the debt they owe to you, there is sadly still no guarantee they will do so, and if this is what happens your next step is to ask your commercial lawyer to start enforcement proceedings.
This can lead to a means inquiry where the debtor’s financial situation is assessed and ultimately a seizure and sale order may be issued so that assets and property which the debtor owns are sold to raise funds to repay their debt to you.
