Published by: Saljuq Haider

Maximising your Cash Flow in your Business

Maximising cash flow is, in many cases, one of the paramount keys to the overall success and indeed survival of any business.  It is therefore always of concern when cash flow is adversely affected by the late payment or worse still non-payment of invoices.

If your business prides itself on providing good quality services and products, then it deserves not only to be paid, but on time.

With the introduction of the Pre-Action Protocol for Debt Claims on 1 October 2017 an additional burden has been imposed on creditors to undertake extensive communications with a debtor.  Perhaps the most onerous element of the Protocol is the amount of time that must be afforded to a debtor before further action can be taken i.e. a bare minimum of 30 days, but potentially much longer.  Even if the Debt Protocol does not apply, the general requirements of the Practice Direction for Pre-Action Conduct still requires giving a debtor an opportunity to settle or dispute the debt prior to any court proceedings.

Further still, having complied with any relevant pre-action protocol, you will then be faced with taking court action to recover your debt.  For disputed debts, this will take the form of issuing court proceedings with a view to proving your entitlement to the debt, obtaining a Judgment and ultimately enforcing it.

It is therefore important that if court proceedings are issued that this is undertaken in a swift and accurate manner in order to avoid a prolonged impact on your business’s cash flow.

Businesses are perfectly capable of issuing proceedings themselves through the on-line court system; however, if and when a defence is received, it is important to be able to deal with the same in the appropriate manner.  Some defences will inevitably fall foul on procedural grounds whilst others will have legal deficiencies.  It is important that these are identified early in proceedings since to do so may result in you obtaining Judgment earlier than the normal course of events.

It is also important that if proceedings are issued without formal legal advice that they are sufficiently pleaded and compliant with the court rules.  If this is not achieved then it may result in a delay in proceedings and pleadings needing to be amended at a later stage.

One of the key objectives must always be to minimise any reason for the debtor to delay judgment being obtained and in turn your ability to obtain judgment and recover the sums due to your business.

There are a number of tactics and procedures that are useful in disposing with proceedings during the early course of proceedings.  By way of example, if a debtor fails to fully particularise its defence, then interim application for further particulars should be made.  If upon considering the defence, it is apparent that the debtor has no prospects of success then an application for summary judgment should be considered.

A failure to recover debt effectively and in a timeous manner will inevitably have an adverse effect on your business’s cash flow and should be monitored diligently at all times.