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| Q:
Will I lose my customers by using Veritas Legal? |
| A:
The use of Veritas Legal will not lose customers –
quite the contrary. |
| Our
services, when applied to your delinquent accounts at
the soonest opportunity, will highlight problems, which
if solved, will actually strengthen customer relationships.
By moving quickly on unpaid debts
you will identify problems/queries at the earliest opportunity.
A debtor with a genuine query quite rightly will not
be happy to be asked to pay for something they shouldn't,
but an apology for your oversight and your swift response
to the problem will be much appreciated and remembered.
Using a simple example, it's always
very sobering to remember that with a 10% profit margin
a bad debt of £750 will require an extra £7,500
of turnover simply to replace the profit lost.
We will help you differentiate between
those customers who can't pay and those that won't pay.
We have the know how to apply the appropriate degree
of pressure to your debtors, whilst at the same time
remaining tactful, polite and diplomatic. |
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| Q:
Surely asking my client for interest and compensation
will lose their custom then? |
| A:
Not in our experience. However from a purely tactical
point of view the first thing you should consider when
deciding whether to invoke this legislation is whether
the claim for compensation and late payment interest will
delay the payment of the principal sum. If you are very
anxious to get a large sum owed to you into your bank
account you will have to think twice as to whether you
wish to aggravate the situation by making a claim for
compensation when without it you may get paid without
any fuss. |
| In
addition, if you have a cherished client that has only
defaulted once and is not likely to again, why undo
months, if not years, of good work by your sales force
to secure that client, with one ill placed demand? It
is after all better to have customers that pay a little
slowly than to have no customers at all.
There is a
very fine balance, between slow and late, but the sooner
you act, with or without the demand for late payment
interest and compensation, the better reputation
you will gain for your company, as your customers will
become better educated that this is the way in which
you will act if payment is late.
By incorporating the legislation into
your terms and conditions, it should act as a deterrent
against future default. |
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| Q:
How can you offer this FREE debt recovery service, as
nobody else seems to? |
| A:
Simple – we make a claim for interest and compensation
under the Act over and above the value of your debt. In
98% of cases your debtor will at the very least pay the
debt owing to you, if not the interest and the compensation. |
| If
everything sought, ie the debt, interest and compensation
are paid all well and good. You get your debt paid with
interest and we get paid too.
If only the debt is paid, or the debt and interest,
then you either consent to us pursuing the interest
and/or compensation on your behalf at no cost to you,
or alternatively you pay us the sum equivalent to the
compensation payable under the Act having regard for
the size of the debt, as per the illustration below.
| Size
of unpaid debt |
Sum
to be paid to the creditor ("Compensation) |
| Up
to £999.99 |
£40 |
| £1,000.00
to £9,999.99 |
£70 |
| £10,000.00
or more |
£100 |
|
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| Q:
Who can claim late payment interest and compensation? |
| A:
The Late Payment of Commercial Debts (Interest) Act 1998
as amended by the Late Payment of Commercial Debt Regulations
2002, provides that From 1st November 1998 - small businesses
have a statutory right to claim interest from large businesses
and the public sector on debts incurred under contracts
agreed after that date. |
- From 1st November 2000 - small businesses have a
statutory right also to claim
- interest from other small businesses on debts incurred
under contracts agreed after that date.
- From 1st November 2002 - all businesses and the
public sector will have a statutory right to claim
interest from all businesses and the public sector
on debts incurred under contracts agreed after that
date.
|
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| Q:
If a business is consistently paying late for the service
we provide them, can we start to charge interest under
the Act, even though we did not agree that we would at
the start of doing business with them? |
| A
It is not necessary for you to have notified your customer
at the start of your relationship with them of your intention
to charge late payment interest and you do not have to
refer to it in your contract. However, it is advisable
[but not obligatory] that you amend your terms and conditions
and make reference to your statutory right to interest
in future contracts, as this may act as a deterrent against
late payment. |
| The matter becomes
complicated if you already have a term that provides
for contractual interest that will be charged on overdue
accounts as this is deemed to be a "substantial
remedy" and therefore you cannot rely on the Act.
However, if you have no terms at all relating to late
payment, then you can rely on the Act to safeguard your
position.
It is advisable, in addition to informing clients verbally
of the right to charge interest as part of standard
payment terms, suppliers of goods or services should
state clearly on all written communications, credit
application forms, order confirmations, invoices and
all contracts:
"We understand and will exercise our statutory
right to interest under the Late Payment of Commercial
Debts (Interest) Act 1998 if we are not paid according
to agreed credit terms."
If you are in any doubt, please send us a copy of your
terms and conditions and we will examine them for you
and advise you as appropriate. There is no charge for
this service. |
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Q:
Does anybody produce a user friendly publication that
will tell me more about this subject and my rights under
the Act? |
| A: We
have always found the information at www.payontime.co.uk
to be a good source of information for companies. |
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| Q: I need to recover some bad debts but they are quite old. Is it worth taking action? |
| A: Provided the debts are no older than 6 years, then it is certainly worthwhile instructing us to issue a letter before action and chase the account by telephone, as this will cost you nothing in any event, unless money is recovered on your behalf. |
|
However, we would advise you to ascertain an up to date address for any legal letters to be sent to if the debt is old, as it is a pointless exercise chasing a debt at an old address.
If you need a trace report, that can be arranged at a cost of £40 plus VAT on a no trace - no fee basis. At least that way, you know that your debtor will receive our letter and there is a good address for service of legal proceedings.
Under the Limitation Act 1980 a debt will be "statute barred" i.e you cannot bring legal proceedings on it, if it is more than 6 years from the date when the debt became due.
For example, an invoice issued on 1 September 2000 that was due on 1 October 2000 will be statute barred on 30 September 2006, if you have not issued proceedings in the County Court before that date.
It makes it all the more important to ensure that you have a good address beforehand, otherwise time could run out on you. |
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