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Getting paid and keeping customers happy

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For businesses that provide credit to their customers, invariably situations will arise where accounts are not paid on time or at all.

Very often there is a conflict between the need to recover money and the need to maintain a good relationship with a customer and we regularly see businesses being too tardy with their collection processes.  This has sometimes caused:

  • Cash flow problems for the business seeking to recover the debt (“the creditor”)
  • Irrational and poor decision making when finally a decision is made to recover the debt (sometimes leading to a destruction of the relationship with the customer)
  • The debt becoming uncollectible because, in the meantime, the customer has become insolvent

Absent a dispute concerning the supply of goods or services, customers who cannot pay for one reason or another will rarely resent action being taken to recover the debt.

It is not too heavy handed to involve your lawyer at an early stage, provided the lawyer is fully advised of the dynamics of the relationship between the creditor and the debtor and the lawyer acts accordingly.

MST’s Dispute Resolution & Litigation lawyers are passionate about obtaining exceptional results for clients who instruct them to assist with debt collection.  We will be aggressive and unrelenting in an appropriate case.  But we will also understand our client’s needs, objectives and budget.

Engaging us does not mean legal action is the only solution.  Often, particularly in circumstances where a debtor is genuinely in financial trouble, it may be far better to shore up the creditor’s position by giving payment terms in return for some security (such as personal guarantees or a charge) and an obligation to pay interest.  We can negotiate and document these arrangements.  These negotiations can include some form of costs recovery from the debtor.

We can tailor our communications to the debtor depending upon things such as the age of the debt, the known circumstances of the debtor, any desire of our client to maintain an ongoing business relationship with the debtor and, of course, the ultimate need to procure payment of the debt.

Our strategies may range from issuing legal proceedings and pending their conclusion seeking orders freezing a debtor’s assets to simply telephoning a debtor or writing a letter to the debtor inviting discussions for a debt repayment proposal.

We can assist you in attempting to resolve disputes with debtors and, if that is not possible, fighting for the best result in Court.

Our Dispute Resolution & Litigation lawyers also have a sound understanding of all insolvency laws and the practices and procedures of insolvency practitioners (liquidators, receivers and administrators).

We can also talk to you about fixed fee arrangements, so that you can have certainty as to your legal spend for the various stages of the process.

Some law firms treat debt collection for their clients as bread and butter basic work for junior lawyers to cut their teeth.  MST is different.  We ensure senior lawyer involvement, either direct or supervisory, at all times, thereby giving our clients the benefits of longstanding commercial experience.

Finally, we can assist in developing and implementing front end strategies for our clients aimed at minimising the risk of bad debts and the need to devote resources to the collection process.

Author:  Philip Colman

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