Litigation

If, despite the best credit control procedures, there are customers who have not paid, referral of the debt to a third party may be successful.

Collection agencies can achieve good results because of the “third party effect” and solicitors specialising in debt collection will send a “letter before action” for usually a nominal fee.

Litigation is the last resort - provided that delayed payment is the only issue and any queries or disputes have been resolved. It is necessary to show that every reasonable attempt to recover payment has been made before commencing legal action and the customer must have been given written warning. However, before litigation, assess the likely outcome and potential cost-effectiveness. Legal costs will only be recovered if the action is successful and remember, the debtor may not have the resources to pay.