Monday, 31 January 2011

Don't let debtors off the hook

Shropshire companies should not have to grin and bear it when it comes to clients stalling over paying their bills.

That's the message from our senior partner, Graham Davies, who said: "We've all encountered clients and customers who try to use delaying tactics when it comes to paying for work that's already been carried out.

"One of the most common tactics is to send a cheque for less than the amount that's owed, as they know it will cost you time and money to chase the balance. And sometimes this payment may be accompanied by a letter that says the amount is 'in full and final settlement'.

"Don't be afraid to bank the part-payment as soon as you receive it, as this will not jeopardise your right to receive the full amount.

"As long as there is no dispute over the amount that's owed, companies have every right to bank the interim cheque and demand the outstanding balance within seven days. You can also point out that if it's not received, further court action will automatically follow.

"But if there is a dispute, you need to take greater care, even if you believe the dispute is unwarranted."

Graham said if a cheque had been sent "in full and final settlement" in a case where the amount is disputed, the safest action would be to return the cheque, including a covering letter that answers the issues raised and requesting payment of the full balance as soon as possible.

"To minimise any future problems if you do cash the cheque, you should write to the debtor immediately to inform them you don't accept it as 'full and final settlement', and that you consider it a part-payment with the balance to follow.

"And don't waste time debating what action to take - the longer you wait, the more likely it is that the courts will say you have shown a strong indication that you're happy to accept the lower offer."