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Debt Recovery - Know Your Customer, 20th May 2013 - Click for larger version Debt Recovery - Know Your Customer, 20th May 2013

In the event that your customer becomes a debtor, the more relevant information you have the better your prospects of making a recovery.

This article aims to highlight information which you should if possible gather in respect of customers and illustrate why that information is important if you require to instruct an agent to pursue debt on your behalf.


Particularly when dealing with businesses, it may not be obvious precisely who is your customer.

A customer may provide you with the name of their business - but it could be the business name of a sole trader, a limited company, a partnership or other type of corporation. Make sure you are clear which individual or organisation is behind the business name.

If you are dealing with an individual trading as a particular business, confirm his business and personal addresses. Ultimately, you would be entitled to pursue payment from all assets of the individual; not just assets which relate to his business.

If you are dealing with a partnership, in addition to the details of the partnership itself, find out the names and addresses of the individual partners. Each of the partners are liable for the debts of the partnership and you would be entitled to pursue payment from all of them.

Particularly when dealing with limited companies there is scope for confusion. Your customer may be part of a group of companies, each with almost identical names. Clarify the precise name of the company you are engaging with and confirm its registration number - registration numbers are particular to each individual company. Company names and numbers can be checked for free on the very useful Companies House website. Confusion as to which company you have contracted with can open up the possibility of a company disputing that they are indebted to you.

Your customer might also appear to be a different type of corporate body, such as a local authority or other government body. Again, however, make sure you are clear exactly with whom it is you are dealing. Local authorities sometimes have limited companies under their umbrella. For example, Culture & Sport Glasgow is a trading name of a limited company rather than Glasgow City Council. The NHS is split into different trusts. Make sure you have the full details of the particular trust.

Contact details

It is vital to have a current residential address for any individuals with whom you are contracting. Ultimately, if you do not know the whereabouts of the debtor it does not bode well in terms of making a recovery. It also makes it difficult to start the recovery process - for example, serving Court papers. It is possible to instruct tracing agents to locate the current whereabouts of individuals and ultimately the Court may authorise service of papers by way of display on a notice board at the local Court or advertisement in a newspaper, but this all causes delay and further expense. In the event that you do require to trace individuals, national insurance numbers are helpful.

Email addresses and mobile telephone numbers can also be very useful. While the Scottish Courts do not yet allow service of Court papers by email, the first step we would almost always take on your behalf would be a letter demanding payment within a set time frame. This in itself can often prompt payment and if we can also send this letter by email or make a phone call the chances of the debtor receiving the message, quickly are increased.

Ultimately, you may also be able to recover payment from the sale of any properties which your customer owns. If you know the relevant addresses then it can relatively cheaply be confirmed with the Registers of Scotland whether the debtor owns the particular properties. Payment of your debts can also be achieved through the sale of items which we may be able to locate at these addresses - for example, cars and other vehicles.

Banking and employment details

If you are able to gather details of bank accounts held by your customer (even just the name of the bank) this is vital information. Your customer may for example pay you by cheque. Keep a copy of the cheque on file for future reference. Similarly, if you are aware of the identity of any other third-parties who hold funds on behalf of your customer or who are liable to pay sums to your customer then this is very useful. For example, you may be a plant hire company. You may be aware that your customer is hiring plant and equipment for the purposes of a contract in respect of which they have been engaged as main or sub contractors, and will be due to receive funds from their employer.

When an order for payment is obtained from the Court, or in certain cases right at the outset of raising Court action, it is possible to freeze funds held by third-parties (such as noted above) which are payable to the debtor - with a view to the funds payable to you being deducted from the sums held and paid directly to you.

A case involving a former director and Rangers was the most high profile example of this tool in recent times. The former director claimed that he was owed substantial sums by Rangers. This was around the time when the media was submerged in talk of "the big tax case". When the case was raised Rangers were on paper solvent - their assets outweighed their liabilities. However, the judge was persuaded that the director had a good arguable case and that there was real and substantial risk that by the time any order for payment was granted against Rangers they would be liable for tax in excess of £100m and would then be insolvent. On this basis, at the outset of the Court action (before any final decision had been made) he authorised the director to freeze sums (up to the value he claimed was due to him) held by third-parties and payable to Rangers. Following an away cup-tie one-half of gate receipts were payable to Rangers by the home team and the director successfully froze sums in the hands of the home team. In that type of case, funds remain frozen until a final order is granted when sums can be recovered from the frozen funds.

When dealing with individual debtors often the most effective means of making a recovery is to serve an "earnings arrestment" upon any employers of the debtor. An earnings arrestment obliges the employer to deduct a certain percentage from the debtor's wages each pay day and make the deductions directly over to you. An earnings arrestment can unfortunately only be used once an order for payment has been granted, and not at the outset of the action as in the above case. If you can obtain employment details of any individual customers or other persons liable to pay the funds owed to you (for example, guarantors) chances of recovery are significantly increased.


To sum up, if you can gather the following information your chances of receiving a recovery are greatly increased:-

1. The name of the business and the precise identity and details of all individuals or the corporation behind the business.

2. Contact and personal details of your customer - including current address, email address, mobile number and national insurance number.

3. Banking details of your customer or details of any other third-parties who may hold funds which are payable to your customer.

4. Employment details of any individuals liable for the sums payable to you.

For any assistance in recovering debts please contact Alan McKee ( or Michael Hankinson ( Alan and Michael can also be reached on 0141 248 4957.

Whether you have occasional debts or a consistent volume which require to be pursued, we can do so on your behalf.

Last updated: 4.23pm, Friday 17th May 2013

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