Fears of recession are prompting firms to clamp down on their bad debtors, forcing many to pay up or go out of business.

Recent hikes in interest rates, coupled with the slowdown in consumer spending, is putting companies under severe pressure and, as a result, many are struggling to pay their bills.

But, according to debt recovery specialist Karl Williams, who is speaking at the forthcoming Credit up North Conference, with talk of an impending recession, there is an increasingly litigious attitude towards debt collection as more and more companies are issuing insolvency procedures to collect outstanding debts.

However, experts are warning businesses to heed caution over taking suppliers to court as they could end up with a hefty bill and may not even recover the money they are owed.

Karl Williams, head of debt recovery at Manchester law firm Pannone, says his department has never been busier as many companies have learned lessons from the recession of the early 1990s.

He says: “Lack of stringent credit management procedures forced many firms out of business, but amidst fears of a new economic slowdown, people have a lot tighter controls in place and are also much more prepared to go through the courts.”

However, Karl says that while such pro-activity is good, companies should look at each case individually and weigh up the financial implications.

He says: “The courts are very keen for debt disputes to be settled out of court as the cost liabilities, particularly in defended actions, can be extremely high.

“Also, even if a business gets a judgement against the money owned, will the debtor have sufficient funds to be able to pay up?

“My advice is to carefully consider the costs involved and make sure they are convinced the defendant can pay the bill, otherwise they could end up incurring substantial costs without recovering a penny of the original debt.”

Karl Williams is speaking at the inaugural Credit up North Conference, which is the brainchild of entrepreneur Steven Holt and is a showcase for the credit, risk and fraud industries.

Steven says that mediation requirements should be the first part of any legal case. “What we need to see is that as part of standard pre-action protocol, a documented mediation meeting should have taken place on claims of a certain value before the court proceeds to a trail date.”

He says that this would make people think twice about issuing vengeance claims or inventing ‘spurious’ defences.

Steven adds: “The end result in a lot of cases that are brought about for vengeful motives rather than commercial sense is that the eventual legal cost, management time and stress can outweigh the principal sum. We need to be taking a more evolved view of litigation and the process has to be one that dictates the mediation process as opposed to suggesting it.”

Credit up North is taking place on November 6 and 7 at Manchester’s International Conference Centre. The event has attracted a huge amount of interest from a number of organisations including; information experts Experian, law firm DLA Piper, the Institute of Credit Management and Her Majesty’s Court Services.

TV’s Jacqueline Gold, Chief Executive of Ann Summers, have been secured as guest speaker along with a whole host of leading Credit, Risk, Insolvency, Litigation and Money Laundering / Fraud Prevention experts.

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