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Tired of chasing unpaid invoices?

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Debt recovery is essential for businesses to maintain financial stability. Unpaid debts can negatively impact cash flow, profitability, and even the overall survival of the business. It is important for businesses to have a clear process in place for debt recovery, including the ability to track and manage outstanding debts, communicate with debtors, and take legal action if necessary.

Legal Considerations

Debt recovery legislation is useful because even where there is no contractual basis for recovering debt recovery costs, the Late Payment of Commercial Debts (Interest) Act 1998 allows for fixed recoverable costs per invoice.  It also allows for the reasonable costs of recovering the debt where these are not met by the fixed sums.  On top of this, it allows for late payment interest to be added to an outstanding debt.  

Recent case law indicates that lost management time in chasing the outstanding debt can also be recovered as well as the unpaid invoice.

Best Practices for Debt Recovery

Effective debt recovery requires a systematic approach and best practices. The following are some of the best practices for debt recovery:

1. Establish a clear debt recovery process: businesses must establish a clear process for debt recovery, including identifying and tracking outstanding debts, sending reminders, and escalating the process if necessary.

2. Communicate effectively: communication is key to debt recovery. Businesses must communicate with debtors effectively, including sending reminders, offering payment plans, and being transparent about the consequences of non-payment.

3. Consider alternative dispute resolution: in some cases, alternative dispute resolution methods such as mediation or arbitration can be more effective than legal action.

4. Use technology to streamline the process: technology can help businesses streamline the debt recovery process, including using automated reminders, tracking software, and online payment systems.

5. Know when to seek legal action: if debtors refuse to pay or are unresponsive, businesses may need to take legal action. It is important to work with a qualified solicitor who can help navigate the legal process and ensure compliance with regulations.

6. There is no substitute for legal action: debt recovery agents can offer pre-legal debt collection services. Without a judgment, these services may be fruitless, because a debt collection agency, even where they act as High Court Enforcement Officers, are unable to seize assets, seek payments, etc. without a court order. Debt recovery agents may charge an administration fee of several thousands of pounds upfront, even if unsuccessful, and will likely charge an additional percentage commission when they are successful. Ultimately, if unsuccessful, these debt recovery agents will then suggest that you instruct a firm of solicitors, whether the firm is in-house or a law firm that they work with. There is therefore an extra layer of cost to using a debt recovery agent compared to simply instructed a law firm at the outset.

Smooth Commercial Law works on a fixed fee basis for debt recovery cases, whether this involves creating a Letter of Claim or Particulars of Claim to launch legal action. We also provide the strong shoulders that can support and offer guidance at each level.

We would be pleased to go over your choices for resolving a debt that hasn't been paid or a legal dispute with you if you'd want to chat about a potential issue.

Call us on 0800 046 9976 or email