All businesses will at some point experience issues with suppliers, bad debts or stand-offs with other important stakeholders, and this is likely to be exacerbated by the impact of Coronavirus.

Once the dust settles, these inevitable ‘bumps in the road’ could turn into full blown commercial disputes, which collectively cost UK companies billions of pounds each year. So, what should you do if your business is heading towards a showdown? Chris Clay, Managing Partner of Escalate, looks at how to avoid the pitfalls.

 

Should you pursue a commercial dispute?

Commercial disputes, late payments and bad debts are a significant issue for UK businesses. Research from the Legal Services Board suggests that UK businesses are losing £40 billion each year due to commercial disputes and bad debt. If we look at the wider impact of late payments on UK SMEs, then this figure becomes even greater, with Xero recently stating that there is £131 billion tied up in late payments.

The problem is exacerbated by the fact that only one in ten businesses think there’s an effective way of resolving issues like this. This is because pursuing a commercial dispute has tended to be a costly, lengthy and risky undertaking for most British businesses.

It’s not hard to see why. Your lawyers will typically bill you based on the amount of time they spend working for you. Given that the average litigation case is around 18 months, it’s not uncommon for these bills to spiral to the level of the damages that you’re claiming.

Even if you can find a lawyer to act for you on a fixed, capped or ‘no win no fee’ basis, you’ll still have to pay up front for disbursements such as court fees, barristers and expert witness fees within a climate where court fees have increased exponentially and recovery of costs for the winning party has reduced drastically.

Add to that the risk that you could be liable for at least some of the defendant’s costs as well as your own if you lose the case.

On top of that, the typical SME doesn’t have the managerial capacity to stay on top of the paperwork and processes associated with a dispute as well as remaining focused on the day-to-day running of the business.

It’s hardly surprising, then, that many companies decide against pursuing a claim and reluctantly write-off what they’re owed.

There’s little doubt that the current system is stacked against SMEs and we think it’s time for change. That’s why we created Escalate.

 

How can you avoid the pitfalls?

So what can businesses do to minimise the risk of getting involved in a dispute? And how should they manage any disagreements that do arise?

1. Agree expectations from the start

Many disputes arise from the fact the parties didn’t take time to discuss their expectations at the start of the process. Invest time up front in clearly defining your objectives, responsibilities, standards etc to prevent a lack of understanding from becoming an issue later on.

2. Document as much as possible

Having a paper trail of important decisions can act as a reminder of the agreements that have been made, providing evidence that can help to bring both sides back on track. Comprehensive paperwork is also likely to help your case, should the issue ever make it to court.

3. Address issues early

The old adage that ‘a stitch in time saves nine’ applies here. A potentially tricky conversation early on can prevent a problem from growing in a complex legal case that will cost everyone involved considerable time and money.

4. Be firm but fair

Your business is important to you, so nobody expects you to give in at the first sign of a disagreement. But don’t let your emotions cloud your judgement. Step back from the situation and ask an impartial observer for their views.

5. Get an expert involved

If you feel that the other party is unlikely to change its mind, it may be time to seek expert advice. At this point, you should consider getting in touch with Escalate.

 

Escalate has been designed to help with all kinds of commercial disputes and bad debts – from straightforward late payments of £1,000 all the way through to complex multi-million pound cases.

Escalate is already managing a wide variety of commercial disputes and helping to unlock over £100 million in cash for businesses. Could you boost your cashflow by using Escalate?

If you have a commercial dispute or bad debt that you want us to resolve using Escalate, please get in touch with us or one of our partner firms.

 

< News & Views

Management Today Award for Escalate Reinforces its Ground-Breaking Role in Supporting UK SMEs

Escalate, the commercial dispute and bad debt resolution service for SMEs, has been named the...

Stephens Scown joins Escalate dispute resolution platform

Renowned South West based law firm Stephens Scown has become the latest professional services firm...

Escalate wins ‘Innovation of the Year’ at the Modern Law Awards

Escalate, the ground breaking dispute and bad debt resolution service, was named 'Innovation of...

Escalate shortlisted for another major award

Escalate, the ground breaking dispute and bad debt resolution service, has been shortlisted in the...

Escalate nets a hat-trick at the Modern Law Awards

Escalate has been shortlisted in three categories at the Modern Law Awards. The business has been...

Escalate is hiring

Escalate, the multi-award-winning dispute resolution business, is recruiting for Business Managers...

Escalate nominated for ‘New Business of the Year’

Escalate has been shortlisted for ‘New business of the year’ at the Lloyds Bank National Business...

Norfolk Chambers partners with Escalate & local firms to launch new member service

Norfolk Chambers of Commerce have partnered with regional accountancy and law firms Price Bailey...

Ashtons Legal joins Escalate dispute resolution platform 

Award-winning East Anglian law firm Ashtons Legal has become the latest leading professional...

UHY Hacker Young joins Escalate dispute resolution platform

UHY Hacker Young in the North West, one of the region’s leading accountancy firms, has become the...

CONTACT US

Contact Us to find out more about how Escalate can help your business.

Our registered address:
Exchange Station, Tithebarn Street, Liverpool,
L2 2QP

Escalate Law Limited
Company No: 10381993

The issue of late payments and other unresolved commercial disputes is rarely out of the news at the moment.  And for good reason.

Accounting software provider Xero estimates that SMEs have £131 billion tied up in late payments, while Pay.UK revealed that SMEs spend £4.4 billion each year collecting the money they are owed. Our latest survey paints a similar picture: we found that 96% of SMEs have experienced a bad debt in the past 12 months, with 60% percent stating that the late payments they experience are a serious issue for them; 42% believe that late payments put their business’ future at risk.

So the problem is well documented.

But what about the solutions? How can we start to drastically bring these figures down?

At Escalate, our focus is all about resolving late payments, bad debts and commercial disputes.  That’s why we’re helping SMEs to recover £100 million to SMEs which would have previously been written off.  So here is our advice on what to do if you face a late payment or bad debt:

Do your research
Get to know your client and invest some time in due diligence, whether that involves asking for references, undertaking a credit check or reviewing the client’s accounts.

Make your terms clear 
Agree expectations from the start. Many disputes arise from the fact that the parties involved did not take time to discuss their expectations at the start of the process. Clearly state your payment terms and other important points up front and avoid leaving any room for doubt later on.

Document as much as possible 
Having a paper trail of important decisions can act as a reminder of the agreements made, providing evidence to bring both sides back on track. Comprehensive paperwork is also likely to help in a court case.

Address issues early 
The old adage that ‘a stitch in time saves nine’ applies here. A potentially tricky conversation early on can prevent a problem from growing in a complex legal case that will cost everyone time and money.

Understand the background 
Talk to the client to better understand the reasons for the issue. Building a relationship with the client may also provide them with an added incentive to prioritise your concerns.

Be firm but fair 
Your business is important to you, so nobody expects you to give in at the first sign of a disagreement. But don’t let your emotions cloud your judgements. Don’t make things personal. Step back and use an impartial observer, if needed.

Get an expert involved 
If you feel that the other party is unlikely to change its mind, it may be time for expert advice. This is exactly why we created Escalate. If you have already suffered financial losses, don’t automatically assume the costs of recovery outweigh the benefits.

If your business is struggling with bad debts, late payments or another type of commercial dispute, remember that there are solutions and writing-off should no longer be necessary.  Please get in touch…

< News & Views

Management Today Award for Escalate Reinforces its Ground-Breaking Role in Supporting UK SMEs

Escalate, the commercial dispute and bad debt resolution service for SMEs, has been named the...

Stephens Scown joins Escalate dispute resolution platform

Renowned South West based law firm Stephens Scown has become the latest professional services firm...

Escalate wins ‘Innovation of the Year’ at the Modern Law Awards

Escalate, the ground breaking dispute and bad debt resolution service, was named 'Innovation of...

Escalate shortlisted for another major award

Escalate, the ground breaking dispute and bad debt resolution service, has been shortlisted in the...

Escalate nets a hat-trick at the Modern Law Awards

Escalate has been shortlisted in three categories at the Modern Law Awards. The business has been...

Escalate is hiring

Escalate, the multi-award-winning dispute resolution business, is recruiting for Business Managers...

Escalate nominated for ‘New Business of the Year’

Escalate has been shortlisted for ‘New business of the year’ at the Lloyds Bank National Business...

Norfolk Chambers partners with Escalate & local firms to launch new member service

Norfolk Chambers of Commerce have partnered with regional accountancy and law firms Price Bailey...

Ashtons Legal joins Escalate dispute resolution platform 

Award-winning East Anglian law firm Ashtons Legal has become the latest leading professional...

UHY Hacker Young joins Escalate dispute resolution platform

UHY Hacker Young in the North West, one of the region’s leading accountancy firms, has become the...

CONTACT US

Contact Us to find out more about how Escalate can help your business.

Our registered address:
Exchange Station, Tithebarn Street, Liverpool,
L2 2QP

Escalate Law Limited
Company No: 10381993