Every business carries some late payment. The difference between businesses that collect and businesses that write off is rarely luck. It is having an escalation path and following it early, before the debtor's other creditors do. This is the path we run for clients, and the decision points along the way.
Escalate deliberately, not emotionally
The worst debt recovery strategy is the common one: months of increasingly frustrated emails, followed by a sudden threat of court. Debtors read inconsistency as weakness. A deliberate path, moving from reminder to formal demand to letter before action to proceedings, with short, stated deadlines at each stage, signals that the next step will actually happen. In our experience a significant proportion of commercial debts are paid at the letter-before-action stage, precisely because a solicitor's letterhead demonstrates the creditor is prepared to spend money to collect.
Use the interest and costs the law already gives you
Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses supplying other businesses can claim statutory interest, set at 8% above the Bank of England base rate, on late invoices, plus fixed compensation per invoice and, where reasonable costs exceed the fixed sum, the excess too. Many creditors never claim it. Including accrued statutory interest in a formal demand does two useful things: it increases the settlement pressure, and it reframes the negotiation so that paying the principal promptly looks like the debtor's cheap way out.
The letter before action is a legal requirement, not a courtesy
Before issuing proceedings, the courts expect compliance with pre-action requirements. Where the debtor is an individual or sole trader, the Pre-Action Protocol for Debt Claims applies and prescribes the information the letter must contain and a 30-day window to respond. For company debtors the general Practice Direction on pre-action conduct still requires a clear letter of claim and a proportionate opportunity to respond. Skipping this stage risks costs sanctions even if you win. Done properly, the letter before action is also your best settlement tool: it should set out the debt, the interest, the deadline, and exactly what happens next.
Choose the right enforcement route for the debtor you actually have
Not every unpaid invoice should become a county court claim. The right route depends on whether the debt is disputed and whether the debtor can pay. For undisputed debts against a company that is solvent but slow, a statutory demand, with the prospect of a winding-up petition 21 days later, concentrates minds like nothing else; but it must not be used where there is a genuine dispute, and misuse carries real costs risk. For disputed debts, court proceedings, with summary judgment where the defence is hopeless, are the proper route. And for debtors who simply have no money, the honest advice is sometimes to stop: a judgment against an insolvent company is an expensive piece of paper.
Judgment is not the finish line
A county court judgment does not itself produce money. Enforcement (writs of control transferring the debt to High Court Enforcement Officers, third-party debt orders freezing bank accounts, or charging orders over property) is a further step with its own tactics and timing. Before spending on enforcement, it is worth spending a little on knowing your debtor: filed accounts, charges registered against assets, and county court judgment history tell you quickly whether there is anything worth enforcing against.
Fix the paperwork before the next debt
The cheapest debt to recover is the one your terms prevented. Clear payment terms, retention of title where you supply goods, the contractual right to interest and costs, and personal guarantees from directors of thinly capitalised customers transform your position before anything goes wrong. If more than the odd invoice is going unpaid, it is usually the terms rather than the debtors that need reviewing first.
This article is general information, not legal advice. Our fixed fees for debt recovery are published on this site. For advice on a specific debt, speak to us. We respond to all enquiries within one working day.