# Chasing Bad Debts



## ryanline79 (27 Sep 2012)

I'm involved with a small service business and we have some outstanding debts. Currently small but going forward I was wondering how best to address them. 

We have sent out a (soft) letter looking for payment within 7 days and have received no response. 

I was wondering is the next thing to do send a letter and say we will be start charging interest if not paid in 14 days as per this link [broken link removed] ?

Ive done a few searches online to look for how other businesses deal with it but doesn't seem to be much online.

Any help would be great, thanks.


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## capnhand (27 Sep 2012)

Hi

Usually threatening to charge interest does not make any difference.

Nor does sending soft letters unfortunately. If you have identified them as slow payers then you need to take more decisive action. 

Either telephone them and try to establish what the problem is and when you expect to be paid and ring them back if the money does not arrive at the time agreed.

Most importantly if you say that you are going to take a course of action it is very important that you actually do what you say. Otherwise they will not take you seriously and you will continue to be viewed as a soft touch.

It is the aspect of the business that I hate.

Hope this helps

capnhand


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## Paddy199 (27 Sep 2012)

Those that shout the loudest get paid.

Call around to them and meet them face to face. Keep calling around to them and make yourself a complete nuisance.


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## Kkma (27 Sep 2012)

Paddy199 said:


> Those that shout the loudest get paid.
> 
> Call around to them and meet them face to face. Keep calling around to them and make yourself a complete nuisance.



Totally agree


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## widebody (27 Sep 2012)

This is how we are dealing with a recent bad debt.

If badgering doesn't work, send a 7 day letter. If that passes, send another letter stating that the issue has been transferred to your solicitors, and say that any correspondence should pass through them (give name and address). Wait another 7 days or so and get your solicitor to send a letter (about 150 euros plus VAT or so). If this passes without response or adequate response, get a summons drafted by your solicitors. The other party will then be given a date by which they must defend it or accept it. If no response after this date, go hell for leather and get a judgement.

I'm at the judgement stage at present with mine.

Good luck with it.


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## Time (27 Sep 2012)

For small debts using the courts is going to cost you more than you would ever hope to recover.

Also some people collect judgements like they collect stamps. They just don't care.


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## ryanline79 (28 Sep 2012)

Thanks to everyone for there advice above - the biggest bad debt we have currently is in the region of €300 so I couldn't see there being much point of getting a solicitors letter drafted. 

How do you treat bad debts in terms of your tax accounts? Can you write them off like you would an expense?


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## Time (28 Sep 2012)

I believe you can write them off eventually. I did see it mentioned before that you need a judgement to have if officially written off.


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## T McGibney (28 Sep 2012)

Time said:


> I did see it mentioned before that you need a judgement to have if officially written off.



This couldn't be true.


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## Time (28 Sep 2012)

Possibly if you are a bank.


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## widebody (28 Sep 2012)

Written off like an expense usually, but you do need to notify the debtor in order to account for the VAT if they are a company. This bit drives me mad.


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## Bronte (1 Oct 2012)

Start with phone calls to all the debtors, but follow up, ask them to send in say 50 Euros on the 300 Euro debt, if you break it into smaller amounts that people can get a handle on you have a better chance.  After phone calls, then personal visit, and try not to leave unless you get a cheque or some cash etc.


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## ryanline79 (1 Oct 2012)

Thanks to everyone for their advice. Thankfully its the situation is not too bad currently but just wanted to have something in place. 

We are lucky in that we have a credit card machine, its hard for people then to say they haven't any cash or similar excuses.


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## 25euronote (1 Oct 2012)

I have a draft civil bill which i send, "draft" is written very small. 
I post this off making a note of the date etc.
I wait 7 days.
70% of the time I get paid.
For those that dont pay, I get my civil bill stamped in the courts and sent off by registered post. Between swearing, stamping and registered letter 'bout 40 quid.
After that just get on with your life, unless you want to super glue their locks.........which I would not recommend.........


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## Purple (1 Oct 2012)

25euronote said:


> After that just get on with your life,


That bit is important. There are times you just have to suck it up and move on.
I'm always thankful I only deal with multinationals as they always pay and pay on time.


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## Paddy199 (1 Oct 2012)

Bad debts can be written off using an internal credit note. Write on the credit note the reason i.e. no response for 3 months, debt over 90 days, company in liquidation, etc. If you account for VAT on an invoice basis this is of huge cashflow benefit. Revenue may request copies of the credit notes, esp. if your VAT goes into a repayment situation.

You can still chase the debt and if you receive it, invoice it again (to reverse the credit note). 

I have seen companies set up a second ledger code for the debtor and post the credit note there. That way they can keep chasing the debtor with statements from the system. Ledger does get a bit messy though!


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## Bronte (1 Oct 2012)

25euronote said:


> For those that dont pay, I get my civil bill stamped in the courts and sent off by registered post. Between swearing, stamping and registered letter 'bout 40 quid.


 
How long from then before you get a court date, and what happens?  Do you stand up in court yourself?


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## 25euronote (1 Oct 2012)

I got seen in dolphin house after 9 months, trim court is great, 12 weeks.


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## 25euronote (1 Oct 2012)

oh, and yes, i do stand up myself. 
i have adopted the atitude, "if you dont pay me - you will have to pay a solicitor - your own."
if i get the impression that im getting nowhere, i just try to keep the corrospondance going longer and longer, every solicitors letter will cost the otherside money and time.


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## Time (1 Oct 2012)

Really?

Many use solicitors letters as firelighters and toilet paper.


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## 25euronote (1 Oct 2012)

Time said:


> Really?
> 
> Many use solicitors letters as firelighters and toilet paper.



many who? 

if they engage a solicitor, they are paying for his services - not me.


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## Time (1 Oct 2012)

What I mean is that many debtors will ignore letters from solicitors as they don't care.


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## 25euronote (1 Oct 2012)

Time said:


> What I mean is that many debtors will ignore letters from solicitors as they don't care.


BUT their not getting a solicitors letter.


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## Purple (2 Oct 2012)

25euronote said:


> BUT their not getting a solicitors letter.





cashier said:


>


I'm  as well.


25euronote, the point being made is that if someone owes you money and you send them a solicitors letter, which you have paid for, they may just ignore it, i.e. use it as toilet paper.


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## 25euronote (2 Oct 2012)

Purple said:


> I'm  as well.
> 
> 
> 25euronote, the point being made is that if someone owes you money and you send them a solicitors letter, which you have paid for, they may just ignore it, i.e. use it as toilet paper.




You are not getting my point.  
I am speaking for my self. Not others.
I dont send solicitors letters - because people DO ignore them.
I act for myself, I send a civil bill. I take legal action, If Im ignored - all the better as I will get jungement, which I will ensure is enforced.
I have represented myself in legal action against creditors and got 5 judgements out of eight. So far the sherriff has called to 2.

The point is - I have written off the money - but I will make the creditors life as miserable as I can - by persuing legal action.
I only incur the costs of the affidavitt, stamping and registered letter, all of which are tax deductable.

If the creditor chooses to ignore my corrospondance- no matter its cost me nothing and I get a judgement registered.

If he chooses to corrospond with me I will take up as much of his time as possible.


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## Bronte (2 Oct 2012)

I have no problem understanding what you've been doing. But would like some more details as I find it fascinating. In the 8 cases you took other than the 40Euro cost of stamping etc, what cost was there other than that and your time. Did you have to go to court more than once for each case. How many of the debtors showed up, how many hired a solicitor. For the 3 cases you lost, why did you lose? Were the other side awarded costs and if yes how much?  It can be only what are I think called scale costs so a miniscule amount so you'd win there too, meanwhile they would have to pay a real cost to their solicitor which bears no relation to the scale costs. 

Maybe you could go through each case separately, no details on individual etc needed.  A step by step account (sorry if I'm asking too much)

I totally get what you are doing, you are standing up to people you feel can pay but are using the system to not pay. They know most people like you who are owed relatively small amounts (my presumption) and who are very busy cannot take the risk and cost of hiring a solictior and going to court. I would do the very same if I knew it was a can pay and won't pay, just for the hell of it. 40 Euro's is small change and you get something back by hitting them in the pocket and putting stress on them. And your getting results, I think you said 70% pay. Well done. This obviously takes time and effort but I bet you're getting very good at it. It's a pity that the justice system is so expensive that most business can not pay a solicitor to take on debt cases.


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## 25euronote (5 Oct 2012)

Bronte said:


> I have no problem understanding what you've been doing. But would like some more details as I find it fascinating. In the 8 cases you took other than the 40Euro cost of stamping etc, what cost was there other than that and your time. Did you have to go to court more than once for each case. How many of the debtors showed up, how many hired a solicitor. For the 3 cases you lost, why did you lose? Were the other side awarded costs and if yes how much?  It can be only what are I think called scale costs so a miniscule amount so you'd win there too, meanwhile they would have to pay a real cost to their solicitor which bears no relation to the scale costs.
> 
> Maybe you could go through each case separately, no details on individual etc needed.  A step by step account (sorry if I'm asking too much)
> 
> I totally get what you are doing, you are standing up to people you feel can pay but are using the system to not pay. They know most people like you who are owed relatively small amounts (my presumption) and who are very busy cannot take the risk and cost of hiring a solictior and going to court. I would do the very same if I knew it was a can pay and won't pay, just for the hell of it. 40 Euro's is small change and you get something back by hitting them in the pocket and putting stress on them. And your getting results, I think you said 70% pay. Well done. This obviously takes time and effort but I bet you're getting very good at it. It's a pity that the justice system is so expensive that most business can not pay a solicitor to take on debt cases.



Your asking too much for me to go through them piece by piece. But the process was the same in all.
The cases I "lost" on, were the first one (learning curve) invoice information was incorrect.
Second one I did not persue it as I was busy.
Third one, I was owed 12k and split the invoices to get one of them into the district court - this was very interesting - as there was about twenty letters with their solicitor. Anyway the judge was not impressed with me splitting the invoice.

Bronte - you have to understand - by the time you decide to take action - you have to have decided to write off the money.  If you get it - its a bonus.
However my atitude is  - if you dont pay me - you will pay someone - either a solicitor or a member of staff etc etc.  I am of the belief that If I can be a nuiscence - I will be a nuiscense!

On one occassion, after about half a dozen letters, I said to a solicitor "I hope your getting paid for this". I never heard from them again. A year later the company (a big building company) was wound up.

The other parties solicitor sends you a letter, a copy of which is sent to the client. You reply, "Its my understanding that ~~~~~~~", that letter is then sent to the client with a cover letter from the solicitor, (which costs money), the client replies and the solicitor writes another letter. And so it goes on.

I explained inanother thread a couple of years ago as to how the process worked in the Dublin District Court.

The staff in the four courts are more than helpful. When you get the form stamped, go to dolphin house, staff there will advise you about the process then.


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## Bronte (5 Oct 2012)

25euronote said:


> Third one, I was owed 12k and split the invoices to get one of them into the district court - this was very interesting - as there was about twenty letters with their solicitor. Anyway the judge was not impressed with me splitting the invoice.
> 
> .


 
That's very interesting, I presume that nowadays you issue all invoices only for an amount equal to the District court level so that in the event of a problem you are able to sue there.  

Thanks for your post it was most informative.  Nice to see someone fighting back and winning too sometimes.


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## 25euronote (5 Oct 2012)

Bronte said:


> That's very interesting, I presume that nowadays you issue all invoices only for an amount equal to the District court level so that in the event of a problem you are able to sue there.
> 
> Thanks for your post it was most informative.  Nice to see someone fighting back and winning too sometimes.


Hi,
As it happens, the work has changed ( I have had to diverse) so my average invoice is about 500 / 800 euro.  I will never let invoices get up tp 6k again.

I am currently exposed to 4 builders for about 1000 each.  This work was only done over the last few weeks.  I dont know if these guys will pay me, but I can live with it.  However I will not take on any more builders till I get paid for at least 2 of these jobs.

I have never been busier with work. Since July, I have had more work than the whole of 2011.  I will start at 7 in the morning and get home at 10 / 11 at night.  I know that it will be too easy too let invoices slip and customers will also be aware of this.
So I make the clients fully aware before I start, (nicely) that I take no prisnors.


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