Debt collection for the self-employed will be seriously affected by the new Pre-Action Protocol rules. These will come into effect in October 2017 and almost double the window of time before court proceedings can begin.
The Ministry of Justice are implementing these rules. They have increased the maximum time-frame within which creditors must respond to debt collection notices from 21 to 31 days.
Should a debtor fail to pay the outstanding amount within this window, the business owner must send a further letter offering 14 days grace.
This effectively gives debtors 45 days from the issuance of a debt collection notice within which to pay up.
How can the self-employed settle debts on time?
Debt collection is a key risk of self-employment.
Here’s what you can do with advanced accountancy software:
- Monitor invoices in real-time to act quickly on any overdue payments.
- Set up automated invoices with convenient online payment options.
- Send out a series of payment reminders of increasing severity automatically.
Use Xero or FreeAgent to keep your cash-flow under control – even with the new Pre-Action Protocol rules in place.