If you are unfortunate enough to find yourself in a situation where you have completed the work for your customer exactly as they asked and they have disputed your invoice, or even ignored your requests for payment, then legally there are steps you can take to recover the monies owed to you.
Unfortunately, some customers may try to avoid paying your invoice, particularly if it is the final invoice after completion of the work. Whether they create fictitious reasons for their delay in payment, or actually ignore your attempts to seek payment, sometimes your only course of action may be to pursue them through the Courts. In order to maximise your chances of successfully recovering the money, you must follow the correct procedure.
Your first step should be good communication with your customer and explain to them why they should pay the invoice immediately. You must bear in mind that any correspondence, including notes of telephone conversations, can be subject to the scrutiny of the court, should the matter progress to Court proceedings.
Should the debtor not respond to you or fail to pay the debt, then the next step would be to issue a letter before action. This is an essential part of the pre-action protocol and will inform them that payment is overdue, and you will commence legal action if the debt is not paid. The letter should also take into account your position on alternative dispute resolution, and your readiness to settle matters outside of the court arena. However, if you do not follow the pre-action protocols then even if you do issue proceedings and you win your case, you may end up having to pay your own costs and those of the debtor.
If the letter of claim has not prompted payment or you have not agreed acceptable settlement terms, then you are left with issuing Court proceedings.
If it is the case that your customer is not able to pay their debts when they become due then the “nuclear option” of winding up (for a company) or bankruptcy (for an individual) may be the only alternative.
