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Every translator knows that a standard dictionary has its limits, and never is this truer than when translating specialist terminology in a domain with a specific vocabulary. In an ideal scenario the translator will have direct experience of… Read More
This article follows on from our introductory and second posts, and describes the official debt collection process for small claims in England and Wales. “Small” here means less than GBP 100,000, so that’s plenty big for most of us. We will also be making a few – hopefully helpful – comments based on our practical experience with this process in the last 10 years, and will be providing templates for the some of the letters to be sent.
Most companies’ (or freelancers’) standard terms are 30 days, i.e. they expect their invoices to be settled in full at the latest 30 days after the invoice is issued. On average, this doesn’t happen, and starting the official legal debt collection process is certainly a fairly potent way to focus the client’s mind and encourage them to pay.
Unfortunately, it could also be convincing argument to place their future business elsewhere, so it is probably worth allowing for a little time to pass before doing anything too aggressive. We occasionally witness the aggressive approach on the receiving end. While we religiously stick to 30 day payment terms ourselves, accidents happen from time to time, and an invoice gets misplaced or not forwarded to accounts. In that situation, it’s just not terribly conducive to good relations to receive a terribly irate email diatribe on day 32.
Our compromise solution is to let another 30 days elapse after the due date, and then to send a polite email reminder. In most cases, the reminder will be sent by our account managers to his/her direct contact at the client, and while we have a template email for this, we encourage our PM to be as natural and chatty as possible.
More than 80% of all delayed payments get settled at this stage, which is really how it should be.
The legal guidelines in England encourage the use of initial informal reminders as per the above, but the hard part of the process starts here. There is a sequence of 3 registered letters (so that proof of delivery can be provided in court, if necessary): First demand letter, final notice letter and pre-action letter. In order for an eventual claim to be as watertight as possible, it is strongly recommended to send all three of these, and to leave at least 14 days between each of them (to give the other party adequate time to respond).
A template for a first demand letter can be found here.
In practice, we leave another 30 days between the polite reminder and the first demand letter. This allows ample time for a couple of follow-up email exchanges, and for the other side to process payment. Between 60 and 80% of the remaining outstanding invoices get settled at this stage.
As you can see from the wording of the final notice letter template here, you will notice that the wording of the letter stiffens markedly.
This is where the scramble usually starts for real. The fact that you threaten to take the other party to court after another 5 days will definitely draw attention (see the template here). In addition, if the amount is over GBP 750, it is worthwhile (and not least: so much FUN) to add a threat of a court date. The latter testifies to the robustness of the English debt collection process: if a company owes you more than GBP 750, you can eventually ask for that company to be put into liquidation. This may not get you all your money back, but it would provide plenty of a different kind of satisfaction anyway.
This is very much the “put up or shut up” stage. Almost all remaining cases have been resolved by this point, one way or another. Mostly this is in the form of payment, sometimes tendered with a claim that this was the first they heard of this issue (yeah, right). Sometimes we receive letters from administrators, informing us that the company is in administration, there are almost no funds left, but if we fill in the enclosed 20 page form, we MAY get something back years later (we rarely bother).
There is an extremely convenient UK government website, Money Claim Online, where under normal circumstances, claims can be filed online. This requires uploading of sensible supporting documents (such as a signed contract), the payment of a filing fee (which can be added to the claim), and the court will take it from there. One important detail: for any supporting documents in a foreign language, you will also need to submit a certified English translation. Eventually, this process will result in a judgement (this all happens virtually, so nobody will ever have to set foot in a court or, for that matter, hire a lawyer).
If payment is still not received, a court-appointed bailiff can also be dispatched at the click of a button, and physical repossession (and auctioning off) may take place.
The requirements for this process are essentially:
Requirement 3) may seem tricky, but this address doesn’t have to actually be yours. It could also be that of a trusted friend or associate.
We have only ever had a couple of cases that went to the bailiff stage, and then we only received partial payment. From what we gather, these were quite extreme cases, where the business premises had essentially been vacated, and the bailiffs simply took whatever was left.
We are very happy to help anyone who has any queries about this process, so feel free to contact us.
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