The reminder comes from Jonathan Chadwick, who oversees the recovery of hundreds of commercial debts each month on behalf of businesses.
He said: “Small businesses in particular are being crippled by a growing culture by larger firms who string out payments terms, with some not paying at all. A lot of businesses aren’t aware that they can claim ten per cent statutory interest and compensation, while others who are aware, are afraid of losing out on future contracts by actively reclaiming their debts.
“Times have changed and businesses need to take a more proactive approach to debt recovery. Where once a business may have borrowed more to maintain a healthy cash flow while waiting for payments to come in, access to funds is now much leaner and some businesses are going bust.”
Jonathan added: “In our experience, sending a letter before action, which gives the debtor seven days to pay before legal action is taken prompts the majority of late payers to part with their cash.”
Stephensons can issue a letter before action for just £10. If this does not encourage a debtor to pay their bill, a solicitor can issue a claim with the County Court or the High Court, to which the debtor then has 14 days to respond. If they do not, a solicitor can automatically enter a default judgment, known as a CCJ. This will affect the debtor’s credit rating if they fail to pay within one month and enforcement proceedings can then be started at any time after this.