WELCOMING long-awaited proposed changes to the county court system just published, debt recovery law firm Lovetts is urging businesses to tighten up their payment terms in readiness for the reforms coming into force in 2013.
The proposed reforms will enable businesses to recover debts in a much more cost effective and time efficient manner - if they change their contractual terms.
Under the new system, the small claims limit is set to rise to £10,000 and possibly £15,000 at a non-specified date in the future for B2B debt. All small claims under £5,000 will be automatically referred to mediation on the basis that this is not compulsory mediation, but rather a requirement to engage with a small claims mediator. In addition, the Government will streamline the procedures for obtaining Third Party Debt Orders and Charging Orders, as part of its efforts to ensure creditors receive what they are owed.
Charles Wilson, chairman and managing director of Lovetts, said: “At Lovetts we are dealing with thousands of commercial debts each month. Over the past year we have seen the average value of claims rise almost 19% as businesses focus on recovering the biggest debts through the legal system. These changes next year will enable businesses to pursue debts of smaller values with improved court and enforcement procedures. However, as the majority of commercial debts are under £10,000, businesses need to grasp the nettle and review their payment terms and conditions.”
He said the reforms would benefit businesses previously nervous about the cost and time involved in pursuing claims.