Lovetts Solicitors Managing Director, Michael Higgins, appeared on a Federation of Small Businesses panel with the Member of Parliament for Guildford; Angela Richardson and MBE, EM3 LEP Board Member; Ren Kapur to set out the post-pandemic Roadmap to Economic Recovery.

Michael Higgins expressed his ‘admiration for the way businesses have coped during the pandemic’ before giving advice on the importance of cash flow and the impact late payment has on businesses.

Key metrics prior to the pandemic showed an economy that was already struggling. These included:

The pandemic will undoubtedly have impacted the economy even further. Cash flow for businesses will be crucial as part of the roadmap to post-pandemic recovery. Michael gave attendees some key tips for businesses to help protect their cash flow. These inclused:

Could the government do more? It was mutually agreed by Michael and Ren that the government could go further in providing support for businesses in order to aid in the economic recovery. However, credit was given for the introduction of the furlough scheme and government grants to help businesses and the general public.

The potential impact of the pandemic in respect of the mental health of employees was also discussed. The panel agreed that employees working from home and in isolation from colleagues was likely to have an impact on mental health and would have to be managed carefully. Michael explained how Lovetts Solicitors had partnered with Oakleaf, a mental health charity based in Guildford, and that mental health first aid courses were offered. Oakleaf also work to support individuals with their mental health by arranging activities that can be attended to via zoom, hampers for their members at Christmas, they offer one to one support and recently have helped 95% of their clients to feel less isolated during the pandemic.

One thing we know can have a positive impact on our mental health is going on holiday. As things stand at present, the government are stating that travel is going to be possible from the 17th May. Ren Kapur had to say that we should still be a little cautious when it comes to the idea of being able to go on holiday as things could change on a week by week basis. Angela Richardson was able to shine some light on this situation as she confirmed details such as the fact that nothing is set in stone and International travel after 17th May is subject to review, much closer to the time. Angela put forward the concept of the ‘traffic corridor system’. This is the idea that depending on the infection rates and how safe it is to travel, countries will be put into either red, amber or green categories to prevent the further spread of the virus or new variants from other countries. She went further to encourage stay cations which seems to be the best way of continuing on our pragmatic road map to recovery.

To share some final thoughts, Managing Director of Lovetts Solicitors, Michael Higgins had to say; “it is going to be a tough road to recovery but there is a lot of faith to be had in businesses”. A similar thought was shared by Ren who agreed that she had a lot of faith in our country and our communities that we can all work together to support one another on our Road Map to Recovery.

Enforcing judgments after Brexit

Arguably the defining political event of recent years, the United Kingdom officially left the European Union on the 31st of January 2020. After a turbulent year of transition Brexit continues to dominate headlines as more causes for concern are flagged with each passing day. For political commentators the negotiations made for fascinating viewing but for businesses wishing to pursue debts against European customers the reality is far more daunting.

More than anything, Brexit exposed the piecemeal nature of international legislation. Even during 2020’s transition period experts found themselves lost within the labyrinthine set of quasi-applicable acts, agreements, and conventions. For business owners this just brings more to worry about in a time where such things are abundant. Nevertheless, it is important to understand the current status of post Brexit UK court judgments and the ability for businesses to enforce them when seeking to recover debts from European customers.

As detailed in this article, businesses must take steps to protect themselves if they intend to continue trade with customers based within the EU.

Jurisdiction Clauses

Prior to Brexit you would be forgiven for skimming over the jurisdiction clause of a recently drafted contract. Given the easily applied legislation at the time, many considered dispute resolution clauses as rather boilerplate. However, with the UK having exited from the EU, a defined jurisdiction can be crucial in ensuring you can issue court proceedings. Even if you are successful in court, without careful consideration of jurisdiction you may find it incredibly difficult to enforce your judgment.

When drafting a jurisdiction clause in a contract there are three options. First, an exclusive clause which provides that any disputes arising from the agreement can only be settled in whichever courts are stated. Second, a non-exclusive clause gives a little more leeway, meaning the proceedings will initially be heard in the stated jurisdiction but can be relocated if necessary. Finally, a hybrid/asymmetric clause essentially means that jurisdiction for one party is exclusive while for the other it is not. This is usually found in contracts where there is a noticeable imbalance of power, such as when a bank loans money to an individual.

The Brexit Effect

A cause of much concern, however, is the lack of provisions regarding jurisdictional clauses or the enforcement of court judgments in the Britain-EU trade agreement (TCA). A variety of agreements that govern the EU (such as the Lugano Convention or the Recast Brussels Regulation) no longer apply to the United Kingdom. As such, English court judgments are now very difficult to enforce internationally without an exclusive English jurisdiction clause.

If you have an English Jurisdiction clause, you can rely on the Hague Convention. The Hague Convention is a structured set of rules for business-to-business legal matters currently recognised and ratified by the EU, Britain, and a handful of other states across the globe. It states that judgments issued by courts with exclusive handling of the case must be recognised across the signatory states. As Britain has ratified the Convention in its own right, there is a theoretical return to the status quo with the EU. A full list of countries signed up to the Hague Convention can be found on their website at https://www.hcch.net/en/instruments/conventions/status-table/?cid=29

The other major legislative structure in play is the 2007 Lugano Convention. The principles of the Convention are similar to the Recast Brussels Regulation and allow the enforcement of many civil matters across the entire EU as well as many of the EFTA states. The UK has applied to accede to the Lugano Convention, however as of March 2021 they have not received the unanimous approval that they require. As this was not a negotiated aspect of the Withdrawal Agreement, the future of this accession is extremely uncertain.

Post-2021 Implications

Due to the fact that the UK is not currently part of the Lugano Convention, businesses can only rely on the Hague Convention. As mentioned above, the Convention provides that where there is a contractual exclusive jurisdiction clause, judgments entered by an English court are enforceable through the EU. However, if your business does not have an exclusive jurisdiction clause, any UK judgment against a customer based in Europe is not directly enforceable. In essence you may be faced with a Judgment that is not worth the paper it is written on.

The current alternative is to issue court proceedings in the courts of the country where your customer is based. This is likely to be an extremely long and costly process, therefore it is imperative that you look at adding exclusive jurisdiction clauses into your terms of business if you have not already done so.

Conclusions

The disruption of the legislative process arising from Brexit has led to concerns over its patchwork implementation. Many businesses are feeling in the dark regarding their legal standing, especially given the lack of attention given to structures such as the Lugano Convention during the years of negotiations.

However, enforcing judgments post-Brexit is not as doomed a venture as it may seem. While the stress of Brexit may make further business deals seem a daunting ordeal, an exclusive jurisdiction clause will give your business protection and make it easier to recovery debts and secure payments quicker and more cost effectively.

Lovetts Solicitors has recently launched Guildways, a UK and International  pre-legal debt collection service. As a no-collection, no fee service for use before legal proceedings are initiated, it complements Lovetts’ fixed fee legal services, and gives flexibility to credit managers both in collection methods and pricing.

It comes at a time where companies are suffering huge pressure on staff, on supplies, on sales fulfilment, and on cash and margins.  There is also the looming spectre of Covid-19 Government support ceasing shortly, just when the business world is trying to get back onto its feet.

Chairman Charles Wilson FCICM says “Growth and economic recovery may, in contrast to the past year, be rapid from 2021 onwards, so the old adage ‘Cash is King’ will never be more true. Growth is bound to mean pressure on customers’ cash, just at a time when there is inevitable stress on each company‘s own finances and cashflow during the Pandemic economy”. 

As part of Lovetts Ltd, Guildways shares the same ethos and professionalism that Lovetts Solicitors has shown over the past 25 years.  It is able to use Lovetts’ highly developed online CaseManager web services, its proven and secure online technology with Cyber Essentials Plus accreditation, giving every credit professional visibility of case data in real time.

Guildways (like Lovetts) is also regulated by the Solicitors Regulation Authority (SRA) under special statutory exemptions of Financial Services and Markets Act 2000. This gives the security of having back-up from a highly experienced and reputable law firm, dedicated to debt collection alone.

If you would like to know more about Guildways, do visit www.guildways.com or contact [email protected] or phone +44 3333 409000.

Lovetts research shows that on average, 6 in 10 customers pay late at Christmas. This trend is of course likely to be exacerbated with all of the financial uncertainty that the Covid-19 crisis has created. Luckily there are steps that you can take to help mitigate this impact, and for every one of the six in ten customers who pay late over Christmas, we’ve got six ways to help you avoid a lump of coal. 

It’s no secret that business slows down during the Christmas period. Offices are closed, staff are away, and paying invoices can become the furthest thing from people’s minds. This is particularly true this year, when the economic fallout from the Covid-19 crisis and subsequent period of lockdown continues to have a monumental impact on our social, psychological, and economic well-being. 

But for businesses – particularly SMEs – cashflow remains imperative, and so it can be useful to head-off any festive payment slowdowns before they occur. Here, we look at six steps you can take to help protect your cashflow this Christmas: 

1. Check that your customer has received the invoice
A common reason for late payment is a customer claiming that they have not received your invoice. By remaining diligent and following up on sent invoices in plenty of time, you leave the option open to resend the correspondence BEFORE the Christmas and New Year’s break.

2. Offer incentives to customers who pay in advance
Christmas is the perfect time of year to show appreciation for customers who pay on time! You could include an option on end of year invoices for prompt payers to receive a small discount.

3. Chase up overdue invoices immediately
Obviously it goes without saying that as soon as invoices fall due you should chase them up. You are entitled to this payment. Customers will often have a lot to wrap-up as they approach year end, and a small nudge can be enough to remind them of what their priorities should be.

4. Target customers with a history of late payments
Do not be afraid to be robust, especially with customers who are consistently making late payments. Companies will often have a handful of customers who are responsible for the majority of late payments, so targeting these people early is a good exercise in helping to protect cashflow.

5. Send a Letter Before Action
On average the Lovetts Letter Before Action (LBA) is effective in 86% of all cases, with no further action being required. At just £1.50 for an email version, it’s a fast, efficient way to stay on top of outstanding payments.

6. Issue Court Proceedings
Whether it is approaching Christmas or not, if pre-action correspondence has been ignored then again, you are entitled to this payment, and it is time to consider legal action. The first step here is issuing a court claim, and you can find out more here.

It’s undoubtedly been a difficult year, and of course we all operate with empathy in the current climate in understanding that many businesses are going through a tough time right now. But this understanding must work both ways, and those reading this will be well aware of how important cashflow is to their own company’s survival even in the most productive of years, let alone in the midst of a global pandemic.  

Even in normal times, payment on invoices that would usually be dealt with in a timely fashion is often pushed back significantly at this time of year. In fact, Lovetts research shows that the average number of days payment is received after an invoice falls due, rises to 48 days in December, and 51 days in January.

Therefore, what a lot of the above advice boils down to, is that it’s important to be particularly proactive in your credit control and debt recovery activities prior to the onset of the festive period. We hope you found these six steps useful, and to find out more about how Lovetts can get you started in your debt recovery efforts today click here.

Lovetts Solicitors has been Highly Commended in the 2020 Law Society Excellence Awards, in the category of Excellence in Business Development. A series of virtual ceremonies for the 2020 awards programme took place earlier this month, in which the winning and highly commended entrants were announced.

“It’s obviously a huge honour to have received this recognition,” said Michael Higgins, Managing Director for Lovetts. “As a firm, we’re proud to have been recognised by a number of awards programmes in recent years. This one resonates particularly strongly, because it comes directly from the Law Society itself, – an organisation that sets the highest standards for our sector. Congratulations to the entire team, all of whom have worked tremendously hard, particularly during the Covid disruption of the last six months.”

Over the past two years, Lovetts has seen significant growth across clients, caseloads, and staff count. Earlier this year the Firm’s Founder & Chairman, Charles Wilson, received the Outstanding Contribution to the Industry Award, at the Chartered Institute of Credit Management (CICM) British Credit Awards 2020.

Despite the onset of the coronavirus pandemic, every single individual across the firm has worked tirelessly to ensure we maintain the highest standard of service for our clients. As we look ahead to 2021, Lovetts expects to grow its business debt recovery offering even further.    

Lovetts Solicitors has launched a direct debt payments platform, securely accessible via the firm’s website. The new portal enables account-to-account payments from debtors to creditors online, removing the need for intermediary transfers. It encourages faster payments to creditors, while providing debtors with greater transparency, more information, and less of the stress traditionally associated with the debt collection process.

Powered by payment processing solution Banked, the new Lovetts platform allows debtors to sign-in securely using their case number and solicitor letter reference. From there, users simply authorise their bank to make payment directly to the creditor company, via either their online or mobile banking app. 

As a technology-driven law firm, Lovetts already employs an online sign-up process, as well as its own bespoke case management software, CaseManager, which allows clients to track and manage cases directly online. The new direct debt payments platform also facilitates the real-time transfer of funds without a holding period, which can be particularly advantageous for creditor companies attempting to manage cashflow. 

“We wanted to take the existing online services we offer, and expand them to create a complete online debt collections process from start to finish,” said Andrew Dancy, IT Director for Lovetts. “Banked is one of the best new ideas to come out of Open Banking that we’ve seen so far, and of course especially as a law firm, the strong security measures that it allows us to build in are hugely important when considering any kind of online payment mechanism. By interfacing our existing technology with this API, we’ve been able to facilitate more seamless payments, and in addition to reducing costs that can be a weight off the mind of debtors and creditors alike.”  

The Banked solution provides a 90% reduction in processing fees, and additionally as a Strong Customer Authentication (SCA) channel, a 96% reduction in fraud. It’s part of the Online Banking initiative, a government-led directive set-up by the Competition and Markets Authority (CMA) in 2018 and regulated by the Financial Conduct Authority (FCA) and European equivalents, to grant users greater control over their financial interactions online.  

Brad Goodall, Co-founder & CEO of Banked, said: “Handling highly sensitive financial information for their clients, Lovetts new direct debt payments platform requires a partner that can guarantee them the highest levels of security and data privacy. We’re looking forward to working with Lovetts as their trusted payments partner of choice as well as the opportunity to bring account to account payments into a new vertical for Banked.”

Managing Director of MBL Collections, Mark Bebbington, has been working with Lovetts Solicitors for more than 10yrs. Here, he talks about his experiences working with the firm, and how our bespoke CaseManager debt recovery software can provide significant assistance in the day-to-day credit management process. 

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Lovetts Solicitors has been named as the 2020/21 homeshirt sponsor for Woking FC. The announcement comes after two seasons spent as a ground and advertising sponsor with the National League side, and increases the firm’s visibility across the club and the local community. 

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Lovetts has become an official partner to ARMA – the Association of Residential Managing Agents, an organisation that promotes high standards of leasehold management across England and Wales by providing advice, training and guidance to its members. 

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Lovetts Solicitors has joined the growing list of almost 6,000 UK businesses that have been accredited with Living Wage Employer status. The cross-party project seeks to encourage businesses to go beyond the government’s basic national living wage and pay a ‘real living wage’ based on what employees and their families need to live.

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