News and insights from our Corporate & Commercial team
Brexit: what does it mean for debt recovery in the UK and beyond?
- AuthorCatherine Rickett
The good people of the United Kingdom could be compared with squirrels this autumn: stockpiling goods and cash ahead of the unknowns of another British winter and the imminent exit of the UK from the European Union.
The deadline is 11pm on 29 March 2019 - just over five months away; incidentally the same as the average length of time it takes to obtain judgment on a defended small (under £10k) debt claim.
Many business owners are already taking steps to protect their firms pending ‘Brexit’. There are so many unknowns that many companies are already keeping extra stock of goods fearing that border delays will hold up business when the time comes. Companies should also ensure that they are on top of credit control and chasing payment of unpaid invoices sooner rather than later when it comes to the unknowns of Brexit.
Now is the time to put your house in order
Whilst it is unknown territory, it is likely that the collection of debts which have originated in the UK will remain the same. Collection of debts in the European Union will remain the same in the UK until all negotiations have been completed. If you have a UK debtor who has left to live in the EU, there is, at present, a European Payment Order, which allows debts to be enforced and collected across borders.
Because the terms of the UK’s exit from the EU have not yet been decided, we are unsure if this is likely to change. What we do know is that preparation is key when it comes to debt recovery, and these uncertain times make this even more so. It is extremely likely there are going to be some changes when it comes to cross-border judgment enforcement.
In terms of consumers, it is possible that there will be difficulties in customers paying debts, particularly if the UK economy slows down. There is a strong chance that UK goods prices will increase, as may unemployment. It is therefore advisable to seek to recover debts as soon as invoices become due, as opposed to waiting until we exit the European Union.
What we can do is reassure you that your debt recovery issues will remain safe in our hands as it is our responsibility to make sure that we are fully aware of the new laws and agreements made so that we can ensure our clients are properly advised.
We strongly advise to take action now! Do not leave it until the Brexit deadline to chase payment from debtors. They too are likely to be holding back from paying you if they are holding onto cash, fearing the worst.
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