Q: What can I do about a customer who is refusing to pay outstanding invoices?
Aug 23 2010
Answered by: Jim Scott Ask a question
It’s an unfortunate situation, but if you can’t resolve this directly with your client on an amicable basis (for example asking them to a face-to-face meeting to fully understand why they’ve acted this way and to see if you can work through it and reach a solution) then you’ll need to consider your other options.
There are a number of sources of free advice available to you. For example, you could speak to your local Business Link (they offer advice on collecting debts without going to court) or you could try mediation via the various alternative dispute resolutions schemes as a less formal route to resolving the matter through the courts (the National Mediation Helpline offers free advice and guidance about this). Some law firms and legal networks also offer free initial legal advice (for example Lawyers for Business). This can be a good way of getting a better understanding of your legal position and whether this is something that you might want to take further (for example, this might help you identify whether there is anything in the contract with your client that could work against you).
There are a number of things you’ll also need to consider if you do want to take matters further. In particular, you’ll need to assess whether your client has any money, assets or anything of value and checking whether your client has any other unsatisfied court judgments against them (searches can be made on trustonline.org.uk). You don’t want to waste your valuable time and effort (and money!) if your client has no means of paying you.
If you end up heading for the Courts, its worth bearing in mind that the Court Service now offers a number of cost effective services and procedures that assist small businesses. For instance, the Courts offer the Money Claim Online service which enables you to make an online claim of up to £100,000 via the Internet. If you aren’t comfortable using an online service you could try the Small Claims Court. Both of these procedures are relatively inexpensive and neither of these services requires use of a solicitor. The Court Service offers loads of useful information and helpful guidance about both of these services by clicking here.
As a final note, you might also find it useful to take a step back and consider whether the actual amount of money in dispute is worth diverting valuable time and effort away from your business or whether it might be better to put the matter down to experience and use that time and effort to put in place practical steps to try and avoid this happening in the future, for example by making sure that you have regular face-to-face account management meetings with your other clients that would give you an early indication of any problems.
Although no-one would argue that this is a difficult decision to make when you’ve worked so hard.
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