Debt Recovery Systems&the Integration of Legal Services into your Business. By Angela Brady of Brady Solicitors in conjunction with the Belfast Business Centre

1. Debt Recovery
Angela Brady
Brady Solicitors
©Angela Brady 2012

2. Overview
• Good practice on developing contractual
arrangements
• Demonstrate the processes and records to
follow to ensure you are paid on time and are
able to easily pursue outstanding debts
• Demonstrate how to bring an application in
the Small Claims Court

3. You will receive:
• Guidance on Terms of Business and standard
clauses
• Guidance on creating a “paper trail” in dealing
with debtors
• Provision of a standard pre proceedings letter
• Overview of the Small Claims Court procedure
including a standard endorsement for the
application
• Guidance on how to present a case in the Small
Claims Court

4. How is a contract formed?
• An offer is made by one party
• The offer is accepted by the other party
• The agreement is supported by consideration
– usually payment
• A contract can be verbal but it good practice
to have the terms written down
• The more the terms of the contract are
written down the less chance there will be for
argument later as to who does what and when

5. Do’s and Don’ts
• Do not be afraid to ask customers/clients to sign
your TOB – it can be of as much benefit to them
as to you
• If you are asked to sign another company’s TOB
then make sure you READ them first!
• Ideally ask a solicitor to review them for you -
he/she will seen issues that may not occur to you
• Use the review of the contract to negotiate better
terms

6. • If your customer/supplier is a large
organisation you may not be able to
renegotiate terms but you should still be
aware of what their TOB contain and use that
as part of your management of the contract
• If some terms are not acceptable to you notify
the other party – if your notification is the last
communication then it is more likely to be
binding

7. Your TOB
• The big boys all have contracts/TOB for a reason –
why shouldn’t you?
• Either have a standard contract to send out on
each job or have your TOB on the back of your
order form/invoice
• If you don’t have TOB when are supposed to get
paid?
• What if you want out of the contract – how and
when can you do that?
• If you import/export and you need to sue which
jurisdiction/ country do you issue proceedings in?

8. Some Standard Terms
• Does your customer have any obligations?
e.g. does your customer need to make any facilities
available to you free of charge?
will you need any information from the customer to
complete your end of the contract?
do you need a right of access to the customer’s
premises?
• Charges/interest – e.g. The customer shall pay
MyCo Ltd the price agreed on the invoice plus vat
plus any other taxes/ interest charges if not paid
within 30 days

9. • Terms of payment –
The customer shall pay MyCo Ltd all sums due
within [30] days of the date of the invoice (If
exporting state the currency payments to be made
in)
If payment is not made on the due date, interest
will accrue at the rate of [4]% over Northern Bank
base lending rate from time to time from the due
date to the date of payment together with any
other expenses incurred in recovering the debt

10. • Ownership of all goods supplied whether fixed
or unfixed shall remain vested in MyCo Ltd
until payment of the total amount due
including such interest as may be chargeable
in accordance with clause [3] above
• Delivery dates – MyCo Ltd will not be held
liable for late delivery or any consequential
loss arising therefrom

11. • Warranties
What do you warrant about the standard of your
product? Substantially performs?
MyCo Ltd will not be liable if someone outside
the company causes or affects the product or
modifications are made to it by the customer
You will want your customer to warrant that it
will not do or omit to do any act or thing which
might impede the operation of the product

12. • Termination
Each party is able to terminate the contract by
written notice of [] days if either party commits a
breach of any terms of the agreement and if that
breach is not remedied within [30] days after
receipt of notice in writing to do so
The other party goes into administration etc
Termination shall not affect the rights of any party
already accrued and which continue after
termination

13. • Confidentiality – if this an issue in your business
you will need a clause dealing with it
• Force Majeure – means that you will not be in
breach if e.g. strike, natural disaster prevents
your performance of the contract
• No waiver of rights if either party delays to act to
enforce terms
• If any provision of the contract is struck out by a
court then the rest of the contract continues to
be valid

14. • No conferring of rights to Third Parties
• Law and jurisdiction – The
construction, validity and performance of this
Agreement shall be governed by the law of
Northern Ireland and the customer hereby
submits to the exclusive jurisdiction of the
Northern Irish Courts

15. General Points
• Review your TOB every year – it is important
that your TOB reflect how you run your
business and the market in which you operate
• One size does not fit all!
• There will be other issues to consider
depending whether you provide any design
work e.g. who owns the Intellectual Property
Rights? Is a licence required? Is Data
Protection an issue?

16. Paper Trail
• Your TOB feeds into the paper trail
• E.g. The clause on payment within 30 days – use
this as part of your credit control. As soon as the
30 days are up ring or email the customer to
chase payment.
• If you ring ensure that a written record is kept –
this will be important if you have to go to court
later
• Print any emails/replies and keep them with your
credit control file

17. Sample email
Dear Tom,
It was good to talk to you this morning. I note that
you said a cheque was in the post for payment of
my invoice number123. I will send you confirmation
of receipt of payment as soon as I get it.
Many thanks
This reminds the customer what he has agreed to
do and also shows him that you are keeping a
record

18. Do’s and Don’ts
• Set yourself a target date by which you want paid.
Keep it tight – you’ve provided the goods or
services and you deserve to be paid.
• Send a pre proceedings letter.
• Keep the letter short and to the point.
• Do not engage in storytelling! You don’t need to –
that’s what your TOB are for.
• Your TOB/invoices/emails etc are the paper trail
or ammunition you need to go to any court.

19. Sample Pre Proceedings Letter
Dear xxxx
We refer to our invoice number 123 and statement
of account which remains unpaid despite phone
calls and emails to your office.
Unless we receive payment in full together with
interest as calculated in clause [] of our terms of
business, within seven days from the date of this
letter, we intend to issue Small Claims proceedings
against you without further notice.
Yours faithfully

20. Small Claims Procedure
• For debts up to £3000
• You can do it online – go to www.courtsni.gov.uk
• If debtor has no money – no point in issuing proceedings. You can
contact the EJO to see if the debtor has any other judgments –
02890245081
• Application forms from local Court office, CAB, Trading Standards
office
• Ensure Debtor/Respondent’s name and address including post code
are correct – if Respondent is a limited company check Companies
House – 08456048888
• Bring the completed form – the original + two copies, the fee and
copies of all supporting documents eg
TOB, invoices, statements, emails, pre proceedings letter etc to the
Court office.
• If there are a number of invoices use the same Application for all of
them

21. • If the total amounts to more than £3000 you can decide if you wish to abandon
the excess over £3000 or instruct solicitors to issue proceedings for the full amount
– but will be costs implications and may take longer
• If you are abandoning the excess over £3000 you must state this on the form
• You sign a statement that you have not issued ant other application in relation to
this claim
• The Court office serves the Application by post on the Respondent. If personal
service is required they will arrange a process server but may require you to pay
the fees for that
• When the form is sent out it will have a return date on it and both parties will
receive an information pack
• If the debt is accepted, the debtor may make an offer to pay over time. If you
accept this offer and payments are not made you can take the matter to the EJO
• If the debtor disputes the claim, the case will be listed for hearing before a judge
• If the debtor ignores the application then after the return date you can apply for a
decree from the court office. There will instructions on how to do this in the
information pack

22. Claiming Interest
• If your TOB states an interest rate use that otherwise
you can use the court rate of 8% p.a.
• You need to set out the interest calculation by showing
the amount, the rate and the period you are claiming
interest for. The interest amount added to the original
debt may take you over the £3000 limit but this is
allowed the original debt is not over £3000
• The form contains a statement of truth that you must
sign. This means that you must believe the facts to be
true and if they are not you may be held in contempt
and may face a fine or imprisonment

23. Sample Interest Calculation
Amount of debt - £1000
Interest rate per year (365 days )
Interest claimed from 1-4-10 when the money
became owing until the date the claim is issued 24-
7-10 inclusive – 115 days
8% of £1000 = £80 which is the interest for 1 year
£80 ÷ 365 = £0.21 which is the daily rate of interest
£0.21 × 115 = £24.15 which is the interest from 1-4-
10 to 24-7-10

24. Sample Endorsement for Application
The Applicant’s claim is for £1000, being monies due and
owing to the Applicant by the Respondent in respect of
goods supplied by the Applicant to the Respondent at the
Respondent’s request on foot of invoices (number) dated
…….
And the Applicant claims interest in the sum of £… in
accordance with clause …. Of its Terms and Conditions of
Sale at the rate of …% and continuing at the daily rate of
…, until payment or judgment, whichever is sooner.
OR
And the Applicant claims interest thereon in accordance
with Article 45A of the County Courts (NI) Order 1980

25. The Hearing
• Wear a suit
• Have all of your documents with you, in order
• It is an informal hearing but you will be asked to take a religious oath or affirm
• Call the Judge “Your Honour”
• The Judge will tell both sides to try to settle
• If no settlement is reached the Judge will explain the procedure
• You as Applicant tell your side first
• The Respondent can ask you questions
• Then it’s the Respondent’s turn to tell his side and you can ask him questions
• Be measured, don’t rise to any provocation from the Respondent
• Losing you temper will not impress the Judge. However, remaining calm in the face of the
Respondent’s temper will impress the Judge
• The Judge then makes a decision
• If you are successful, you will be sent the Decree for the amount of the debt, any interest and the
court fee
• If the Respondent does not pay on foot of the decree within 14-28 days you can go to the EJO
which has its own procedures
• The decree is a County Court judgment and may affect the Respondent’s credit status