It has been reported recently that Thames Water’s external affairs director Richard Aylard ,commented that one of the reasons for a proposed hike of £29.00 per household in water bills for the Thames area, was due to bad debt being suffered by the organisation.
It is reported that Mr Aylard blamed this bad debt on London's transient population ‘most of whom can afford to pay their bills, but we can't chase them’.
Any industry anomalies aside, Mr Aylard’s comments seem to suggest that the current law favours debtors more than businesses. Given Whitehall’s recent push to assist people with outstanding debts and to release pressure from the ‘bully boy’ tactics that pay day loans providers utilise, this may not be surprising.
Whilst it should be expected in times of economic fragility that this increase in bad debt should have been foreseeable it remains important for businesses to recover these debts so that shortfalls are not unnecessarily passed on to the end consumer as in the above example. To put Mr Aylard’s comments into perspective, bad debts cost Thames Water £93.7m for the financial year 2012/2013, a 33% increase on the figure of £70.6m for 2011/2012. Given these figures, it is inevitable that some shortfall would have to be passed on to the consumer.
With further reductions of bailiff’s powers also currently being implemented by the Government, businesses with bad debt may wonder what they can still legitimately do to recover bad debt. Notwithstanding this recent trend, there remain a number of viable legal tools for creditors seeking to recover bad debts in a professional and open manner. It is not the debt recovery process the Government is seeking to restrict but those who use it to extort money from vulnerable parties.
It is evident from this example that recovering bad debts is a balancing act between gaining hard results, which will assist in preventing businesses from passing on undue costs to consumers and undertaking the debt recovery process with integrity and in a professional manner. This prevents alienation of customers and helps to preserve an organisations reputation in the face of potential public criticism.