When you are owed money by customers, it can cause problems for your business. For many business owners, getting customers to pay on time is an ongoing battle.
Dealing with business debts takes up valuable time - taking you away from the core operations of your business. And when the money you’re owed starts to mount up, it can cause serious cash-flow problems that could threaten the security of your business.
If you’re experiencing difficulties recovering money you’re owed, it’s important to take action as soon as possible. Ignoring the problem can mean things quickly spiral out of control. By talking to us you can regain control of your finances and put plans in place to help secure the money you are owed as quickly as possible. We can help you recover existing debts and support you in putting processes in place to reduce the risk of bad debts in the future.
We know that you don’t want legal matters to take up more time than they need to, so our solicitors work thoroughly but efficiently to help achieve the best possible outcome for your business. With our free initial assessment and same-day response promises, you can easily get answers to your immediate questions before planning your next steps. So, if you need legal advice to support your business, call us on 08082747557 today.
Business debt - money owed by the customer
As a business, you rely on prompt payment of the money you are owed by customers. Where a customer is late in paying this can cause your business cash flow problems. Our small claim service should be able to help you.
Your legal right is for the other side to keep to their side of an agreement (or to compensate you for failing to do what was agreed).
Therefore as a business, where you provided a product or service (so long as this is in accordance with what was agreed) then you’re entitled to be paid what was agreed.
What do you have to prove to bring a claim?
There was an agreement reached as to what each side will do. To bring a claim, you will need to show that the other side has not complied with all of their part of the agreement.
It is important to show that you have complied with what you were meant to do under the agreement.
If the other side is not paying because they were unhappy with the product or service you provided then you may need to show:
- That the product or service provided to the other party were of satisfactory quality Consumer Rights Act 2015
- That the goods and services were supplied at a reasonable time for use Consumer Rights Act 2015
- That you supplied the product or service with reasonable care and skill Consumer Rights Act 2015
What evidence should you collect together?
- The Quote
- Letters/emails/texts between the 2 sides.
- Where relevant - photographs of the product or service
What can you claim?
Where 2 people or businesses reach agreement for the supply of a product or service for a price their agreement is known as a contract.
People do not always cover every aspect of the agreement. Therefore the law implies certain aspects – such as the product must be of a reasonable quality.
If one of them does not follow what was agreed (or what is implied by law) then the other can bring a claim:
- to force the other to comply with the contract, or
- for compensation for their breach of the contract.
- If your contract or agreement with the customer gave you a right to interest if they were late in paying, then you can also claim this interest.
What is the deadline for starting a claim at court?
6 years from the date the contract was breached.
- Tradesman owed money by a customer.
- Professional owed money by a client.
- Business owes a supplier money.
Information to include
Sample letter – Sample letter – Business debt
Money owed to “Fabulous Florists Ltd”
Start of official letter to other side.
[If you know the person’s name]: Dear Mr Smith,
[If you do not know their name]: Dear Sirs,
Any relevant background information:
What was agreed between you?
What happened (in date order)?
Be specific and refer to any written or verbal agreements
On 13 October 2013 your company, Brilliant Business, asked us (Fabulous Florists Ltd) to provide two pedestals and 12 table decorations for the County Business Awards.
We had a telephone discussion about your requirements and agreed we would email our quote for the job.
Later on 13 October we emailed you offering with our quote to provide the displays we had discussed for £1,200 (Including VAT).
You then emailed us on 14 October accepting our quote.
On 25 October 2013, Fabulous Florists provided Brilliant Business with the two pedestals and 12 table decorations as agreed. Brilliant Business were happy with the arrangements.
On 26 October we sent your company our invoice number 000700 requesting payment of the £1200 within our usual business terms of payments within 14 days.
I have kept copies of these documents should they be disputed.
I also took photographs of the display provided.
Details of any payments requested and any payments made.
Payment of invoice number 000700
It may be an oversight but no payment has been made to us by your company of the £1,200 due. This breaches the agreement between us.
Be as clear as possible about the remedy you would like.
- Say what action you would like them to take (or stop).
- Where you are asking for a payment - put a price on the you seek.
You are in breach of the agreement between us.
Please see that the outstanding sum of £1,200 is paid within the next 14 days. It can be paid:
- by cheque payable to Fabulous Florists Ltd, or
- by card over the phone (call 0116 729 3402),
- or by direct transfer to account number 51205910, sort code 89 34 21.
Give your opponent 14 days to reply to the letter – to either:
- agree with your complaint and give you the remedy that you seek
- arrange to inspect the problem
set out their detailed response.
Please do not ignore this letter. I would like us to try to resolve our dispute without court proceedings and legal costs.
Please make the payment in the next 14 days, so that this dispute can be resolved as set out in this letter.
If you do not agree that you are liable for the £1,200 then pease reply within 14 days with a detailed explanation of why not.
Point out that ignoring your letter will mean you may start legal proceedings for the court to deal with the dispute and that you may refer the judge to your letter.
I am sure it will not prove necessary but if I do not hear from you within 14 days, I reserve the right to start court proceedings without further reference to you. I will ask the court for an order that you pay me £1200.
If I do have to issue court proceedings, I will refer the court to this letter and I will also ask the court to order you to pay me interest, court fees and legal costs.
I look forward to hearing from you within the next 14 days.
[If you started with their name]:
[If you started using Dear Sirs]: