New Pre-Action protocol rules will make recovering debt from individuals a lot more difficult according to Business Debt Collection experts.
New rules that are set to be introduced by the Ministry of Justice will take effect from October 2017. The window of time in which individuals are given to respond to a debt claim letter are set to increase by ten days from the current twenty-one days.
And if an individual fails to pay within that time frame, the new direction requests that another letter is sent giving a further fourteen days. This means that individuals will now have almost double the time than the existing period before they can be taken to court by creditor.
The new rules are going to cause a real headache for businesses claim Legal Experts. They will see an increase in administrative chores as well as slowing down the time in which payments are received.
Debt Claim letters are also going to be required to be more in depth such as additional details on the type of contract (oral and/or written) the offer of payment by instalments and the rate of interest that is being added, if any. To add to this the letter must also be sent by posted mail.
Companies across the UK will no doubt see their cash flow reduce and administrative tasks increase making it far more costly when dealing with non paying customers.
Failures for companies to follow the due processes may lead to sanctions and could well prejudice their claims for payment if the new rules are not followed.
It is expected there will be a surge in companies outsourcing their debt collection requirements rather than facing the risk of additional credit control costs and failing to meet the criteria.
Business Debt Collection experts Federal Management advised they have already seen a surge in large companies expressing their concerns over this and how it may affect their modus operandi.