Debt recovery law firm, Lovetts PLC, has revealed that despite companies still wanting to preserve good relations with their clients, they are hitting late payers with the threat of legal action much sooner than anytime previously in the past year as positive cash flow continues to be a priority. In the last quarter of 2010, late payers were being issued with a Letter Before Action (LBA) 10 days sooner than the same period in 2009. And once that LBA is sent, debtors are getting a week less (7.5 days) to make the payment before a legal claim is actioned.
Charles Wilson, Chairman and Managing Director of Lovetts, said “It is encouraging to see that businesses are not letting late payments lie. It’s often a dilemma when it comes to chasing debts as there is understandably a reticence to alienate customers. What seems to have changed, is that once the rubicon has been crossed, clients are moving with less hesitation to take decisive action to recover what is due. Late payments have a knock-on effect down the supply chain and can be severely damaging, particularly at times such as now when so many businesses are being affected either directly or indirectly by the spending cuts and tax increases.”
Lovetts has also seen the average value of legal claims to recover debt rise. Charles Wilson continues: “The rise in the value of debts being chased is largely due to businesses focusing resources on securing the big debts which have the biggest impact on cashflow. With limited manpower and budgets, this is a sensible way to prioritise, but in the long term it is important that businesses remember those smaller debts can quickly add up to create a significant cashflow problem. We therefore urge businesses to consider an LBA or Late Payment Demand for any late payment and to follow it up. In more than 80% of cases they work – and for the persistent late payers, use the legal process to secure the debt and discourage late payment in future.
“What many businesses are increasingly coming to realise is that a successful legal claim will recover interest and include most legal costs. In some cases the debtor will even have to pay compensation to the firm, meaning businesses could often have nothing to lose by chasing the debt through the legal system.”
Notes to Editors:
Lovetts Plc is one of the UK’s leading law firms whose sole line of business is the recovery of overdue debts and any commercial litigation resulting from debtor/creditor agreements.
Through this specialism and over 20 years in the debt collection industry, Lovetts has developed industry leading software for the efficient management and prompt recovery of debts, both in the UK and overseas.
Lovetts was the first UK law firm to become a Public Limited Company in 1994.
For further press information please contact:
Jen Staniforth
0208 977 9132
lovettsteam@harrisonsadler.com
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