Karen Walsh: Invoices and paper trail will make debt recovery easier

Having good financial records will make securing payment of a lawful debt a lot smoother.
Karen Walsh: Invoices and paper trail will make debt recovery easier

Recovery of monies due is vital to the survival of a farming enterprise, and it is an unfortunate fact of life that recourse to the courts is often a necessary step to be taken in order to achieve this.

Given the nature of modern farming, and the current volatility of dairy and beef markets, farmers quite often find themselves either with debts of their own, or finding it difficult in some instances to recover a debt.

In these scenarios, farmers may need guidance in order to protect themselves and their farm from any undesired consequences.

Cash flow is of significant importance to the financial well-being of every business, and if a customer does not pay on time, or refuses to pay at all, it can place any business under immense pressure.

No business can survive indefinitely without sufficient cash to meet its costs and debts.

It is advisable that a farming enterprise should put in place a comprehensive system for debt recovery.

The first essential element of this is good record-keeping.

Ideally, where produce is sold to a third party, an invoice should be issued.

This may seem unrealistic to Irish farmers, but a comprehensive paper trail will always make debt recovery easier.

Adequate book-keeping and record maintenance will also prove invaluable, should the normal amicable means of debt recovery fail.

They protect the creditor and, more importantly, facilitate a more simplified and comprehensive recovery process.

Before engaging legal representation, one should consider the other available options.

These include trying to engage with the debtor by telephone, or by some other amicable means of communication, in an attempt to agree a method of payment.

The debt recovery process will be significantly easier if both parties are willing to communicate effectively.

One should never use unlawful means, such as harassment, threats, or intimidation, to force a debtor to discharge a debt.

If a telephone call does not resolve matters, then it is advisable to make a request in writing, whether by email or by letter.

Having the request for payment in writing will place matters on record.

This may be very important at a later stage, should the debtor attempt to deny the existence, or the extent, of the debt.

Most importantly, it will also provide a record of the efforts made to resolve the matter before resorting to the courts.

In mitigation, the courts will always look to the efforts made by the parties to resolve the problem, and whether there was any compromise shown.

Recovering a debt through the courts can often prove time consuming and expensive.

It is always best practice to determine, at the outset, whether or not pursuing legal proceedings is cost-efficient.

If the debtor does not have funds to repay the debt, or if the debtor does not have any assets against which a judgment may be registered, then the process may well prove inefficient, and usually amounts to “throwing good money after bad”.

However, the creditor will be in a better position to make a well-informed decision about the wisdom of taking proceedings against a debtor, if he has information about the debtor’s financial circumstances, such as his or her farm’s solvency.

We often see where a contractor finds it difficult to get payment from a customer, they look to the legal system for recovery.

Good financial records will make the process a lot smoother.

There are important factors to remember when looking to the courts, such as the thresholds of debt for each court.

For example, for the Circuit Court, the debt must be between €15,000 and €75,000.

Any claim above or below this must be brought in the District Court or the High Court.

There are also strict time limits on bringing debt claims, as set out in the Statute of Limitations Act, 1957.

Usually, a debt must be recovered within six years of the debt accruing.

Difficulty in securing payment of a lawful debt will always be a problem for farming enterprises.

Despite this, it is advisable to avoid going to court, if at all possible.

A creditor should exhaust all amicable means in an attempt to obtain payment.

If seeking to recover a debt, ensure all avenues of communication remain open.

Karen Walsh, from a farming background at Grenagh, Co Cork, is a solicitor practicing in Walsh & Partners, Solicitors and Commissioners for Oaths, 17, South Mall, Cork.

Telephone: 021-4270200

Email: info@walshandpartners.ie

Web: www.walshandpartners.ie

While every care is taken to ensure accuracy of information contained in this article, solicitor Karen Walsh does not accept responsibility for errors or omissions howsoever arising, and you should seek legal advice in relation to your particular circumstances at the earliest possible time.

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