A legal expert specialising in debt recovery issues has welcomed research that shows solicitors’ letters can be an effective way to recover outstanding debts.
Sharon Walker, debt recovery manager at regional law firm Napthens, points to research from data and insight specialists Ormsby Street.
The results of a survey of 30,000 customers showed that, on average, when a Letter Before Action (LBA) is sent, two thirds will result in a small business being paid the cash they are owed within just seven days.
An LBA is intended to be the last letter sent before commencing legal action to recover a debt. The research also found that where a company chases a debt on its own, two thirds of invoices remain unpaid after one month.
Other findings show that invoices sent out by businesses with a turnover of less than £5million, can take 72 days to get paid.
Sharon Walker of Napthens said: “Debt, if not managed properly, distracts a business from its goals, chokes it and can ultimately cause it to struggle and even fail.
“It’s always best to seek the help of professionals to turn invoices into cash, and this research confirms this approach.
“Small businesses in particular can really struggle if late payments are allowed to mount up, and having a good strategy in place to deal with the scenario.
“We know that small businesses in the UK are owed billions of pounds collectively in unpaid invoices, so it’s important to be prepared for this scenario.”