Corona Virus (COVID19) and debt recovery
Coronavirus Disease 2020 Graphic

Corona Virus (COVID19) and debt recovery

2020 Debt recovery in the midst of the Corona Virus outbreak, what can you do?

From February 2020 when the first hints of a lock down were being mentioned many businesses had already begun to struggle. Unbeknownst to many people there were a number of deals and contracts not fulfilled due to the outbreak of corona virus. Where a company was in a distributor/supplier relationship with a party in China they were unable to fulfill contracts. This has affected the UK itself and many companies are implementing force majeure clauses. Meaning that this situation is unprecedented and unforeseeable, effectively defining it as an act of god.

However, this has left many small to medium sized businesses out of luck and out of profit. Many companies have already fallen foul of large debts that they are now, when they need it most, unable to call in. Don’t let your business suffer as a result of this pandemic and ensure that you take appropriate steps to ensure that your debt is recoverable, despite the circumstances.

Corona Virus debt recovery measures

At the outset it is worth reviewing your standard terms and conditions. This is to ensure that going forward COVID19 and its lock down cannot trigger a force majure clause and mean that your contract is unenforceable.

A crucial practical step is to ensure that any large debtor is a known entity, understand their position and market to know whether you are at risk of a defaulting debtor. This is especially important in light of granting any extension or credit period.

If you suspect that you may not get payment when it falls due, and you have no contractual basis to ensure this, it can be prudent to write a collateral contract specifying a payment date for something to rely upon at a later date. If you do not do this, then there is no evidence to back up any conversation or alternate agreement you have with the other party.

Remember, if it’s not written down it effectively didn’t happen.

Ensure that all correspondence is in written form, anything said over the phone will be difficult to rely upon if a debtor later becomes insolvent. You will want to take practical steps to ensure that all emails from your business are centralised and you retain a clear picture of their position. Further to this, you’ll want to make sure that everything is backed up externally. As people are no longer making trips into the office many are neglecting the importance of data backups.

Debt recovery during the Corona virus outbreak.

When considering potential avenues for pursuit, as with anything, it is very much circumstance dependent. Ensuring that having a third party, such as us, are involved in any negotiation, discussion or pursuit can ensure that you remain in a position of strength going forward. Due to the circumstances most businesses have moved to a mobile method of working and their staff has moved from the office to the home.

With many commercial debts, and in contemplating its recovery(bit long winded), it is often the case that liaising with the debtor will become very grueling. The excuse for non-payment has never been so self-evident! Whilst its worth approaching with tact and diplomacy many businesses are dying due to debtors hoarding money from their creditors.

Our approach to debt recovery during corona virus

We as a business have taken the approach that we will conduct our debt recovery on a no win no fee approach. Upon instruction we will understand your position and your debtors then find a way forward with a plan of action. Often, regrettably, debts are not cost effective to pursue. We can help you and assess the likelihood of success when challenged with a non-paying client or customer.

Our plan of action ultimately as a worst case scenario will always be a court procedure. This is still viable at the moment; however the changing landscape of corona virus – sometimes daily – means that this is subject to change. However, this procedure may need to be accelerated in light of the circumstances. Third party debt orders, charging orders and taking control of goods is still viable within the current statutory framework and we are keeping abreast of this.  

Coronavirus, debt recovery and your next steps

During this crisis action is important; the future fate of your business will very likely depend on it. Don’t hesitate to contact us if you have a debtor and they’re not paying. We are here to help and discuss, even if you ultimately don’t end up instructing us. We have seen many old colleague’s businesses being insolvent over the last few days and it is terrible to see. We are more than happy to provide you with free advice and assistance.

Final considerations

Just remember, at the moment there will be many losses, many of these will be wholly irretrievable until after this epidemic has blown over. On the other side of your loss is another company with employees trying to ensure their own viability. In this difficult time we are able to help you to survive without costing you anything. We only charge a percentage of what we recover for you.