Debt recovery is an area that affects the equine industry as with other business sectors. Horses, stables and livery yards are valuable assets and therefore unpaid debts can total substantial amounts.
Debt recovery can affect the equine industry in the following ways:
• Sale of horses or ponies
• Loan agreement payments
• Livery yard rental income
• Equipment rental income
Prevention is always better than a cure. Here are some general tips on avoiding debt recovery claims:
• If you are dealing with large or expensive transactions then complete an online credit check against any purchasers. This will protect you against both corporate and private buyers who are either bordering upon insolvency or bankruptcy.
• Agree upon a set of terms and conditions of sale with your purchaser. This will ensure that you have a structured approach to seeking payment and charging interest upon any late payments.
• Instruct a solicitor to draft a ‘reservation of title’ provision in the sale contract. This will mean that although the horse (the ‘goods’) may be delivered to the buyer, the legal title does not pass over until the seller has received payment.
• Where possible provide your buyer with an easy method of payment. Provide clear information on your invoice of the relevant bank details or who cheques should be made payable to.
What can I do when I don’t receive payment?
It can be tiresome to hear excuses such as “the cheque is in the post” or “we haven’t received a copy of the invoice”. If you come across persistent resistance towards payment, then there are a few steps that you can take in order to encourage the buyer. You can ask your solicitor to send out a debt recovery letter on your behalf. Sometimes receiving a letter from a solicitor encourages prompt payment.
If this is unsuccessful and the debt is over £750, you can issue a statutory demand. If the debt is not paid after 21 days and you think the buyer has money available, you can petition the court to wind up the company, or make an individual bankrupt. This action should only really be taken when all lines of communication are exhausted and there is no contention over the payment or goods.
If you believe that a customer has since gone out of business or may be bankrupt, you should seek legal advice immediately to find out how you can go about claiming your goods back or seeking payment.
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