Managing Cash Flow

Managing cash flow is essential for running a successful business.

Debt Recovery is a significant part of this process.

It is very important to have a well organised, internal credit control system for seeking payments of invoices to ensure low levels of unpaid debts.

Common steps would include: –

• Diary invoice payment dates and send a timely reminder immediately in writing;
• Telephone the customer if payment has not been made within seven days and request payment by a certain date. Diary and review on that date;
• Send one more reminder requesting payment by a certain date, diary and review;
• If payment is not made, notify the customer in writing of your intention to refer the matter to your solicitor by a certain date. Diary and review; and
• If payment is still not made, contact your solicitor to commence action immediately.

There is a 6-year Statute of Limitation period for the collection of unpaid debts. Once this 6-year period has passed, you will be no longer able to pursue the unpaid debt.

When to Engage a Solicitor

If you become aware that the customer is in financial difficulty or they are at risk of liquidation, you should contact your solicitor immediately.

There is a greater chance of recovery if you engage your solicitor promptly.

Your solicitor can review your terms & conditions and invoices to ensure the appropriate protections are in place for you to include a Retention of Title clause on your invoices which will allow you to take possession of the unpaid goods. However, for this to be enforceable, your Retention of Title clause must be properly drafted and incorporated into the contract with the customer.

Advantages of Engaging a Solicitor

1. Sometimes customers will take the formal threat of legal action from a solicitor seriously which can be sufficient to obtain payment;
2. The customer is put on notice of the additional costs of legal proceedings, which can encourage payment before proceedings are issued; and
3. Recovery is even more likely once formal legal proceedings are served.

For more information on managing cash flow in your business, please contact Aideen Shanley, in our Debt Recovery Team on 01 440 8300 / ashanley@bhsm.ie for further information.

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.