A Sole Trader/Individual Wont Pay Debts? : Pre Action Protocol
A lot of businesses are familiar with sole traders/individuals who simply cant pay their invoices on time. There are many reasons why sole traders don’t pay such as lost invoices, unexpected clauses they didn’t read into to unexpected charges that they could not afford. Regardless of the reasons, as a business you need to be resilient in terms of receiving payments from individual/sole trader debtors.
Agree on terms before taking on the customer
Outlining your business agreement is a sincere way of building trust with the customer so that they understand the process of the payments. A lot of business outline their terms and conditions to a customer before and after the point of sale. Having this process infuses trust within a customer to deliver payment once the service has been made and commits them to paying.
Have a strong policy that punishes late payers
By having strong polices instilled within your service, it ensures that customers have the mutual respect you desire from your audience. A policy could be as simple as having a 10 day late fee installed when a payment is late. This ensures that customers know you mean business and that late payment isn’t condoned.
Watch our short video on Pre-Action Protocol
Hiring a debt recovery service that specializes in Individual debtors
As a business is simply not cost effective to be chasing every single customer who hasn’t payed for your services. Some circumstances could prevent you from reaching out to disappearing debtors which causes a lot of strain in your business. Hiring a debt recovery service allows you to resolve the matter without the need for court proceedings. Debt recovery experts would ensure the cooperation between parties to act in a reasonable and proportionate manner. They are able to send a Pre-Action letter as soon as the debt becomes due
What is a Pre-Action Protocol Letter?
A Pre-Action Protocol letter requires
• details of the agreement under which the debt is payable including who made the agreement, whether it was written or verbal and the date it was made. It also needs to be stated that further information or a copy of the written agreement can be made available to the debtor upon request;
• payment details including the method of and address of payment, and details on how the debtor should proceed if they wish to discuss payment options;
• an enclosed Reply Form, Information Sheet and Financial Statement Form, all of which have been provided for use in the protocol itself;
• a reply address where the debtor is directed to send the Reply Form