Commercial debt recovery starts with establishing that the debt is due, identifiable and supported by evidence. Review the contract, purchase orders, invoices, delivery records, acceptance records, correspondence and any agreed payment terms. Check whether the customer has raised a genuine dispute about quality, delivery, set-off or contractual performance. Harper James is a UK full-service commercial law firm advising businesses on commercial disputes and debt recovery under the laws of England and Wales.
A structured pre-action process often resolves a debt without court proceedings. Send a clear letter before action identifying the agreement, invoices, principal sum, interest and deadline for payment. The letter should explain the proposed court action if payment is not made and invite the debtor to identify any dispute. A business creditor may claim contractual interest where the contract provides for it. The Late Payment of Commercial Debts (Interest) Act 1998 can also provide statutory interest and compensation for qualifying business-to-business debts, subject to its conditions and the terms of the contract.
If payment is not made, the creditor can issue a county court claim for the debt, interest and permitted costs. The debtor may admit the claim, defend it or fail to respond. A judgment does not itself produce payment, so enforcement may involve methods such as a warrant or writ of control, an attachment of earnings order in appropriate cases, a third-party debt order or a charging order. A statutory demand is a separate insolvency procedure. It is generally appropriate only where the debt is due and not genuinely disputed, because using insolvency proceedings to pressure payment of a contested debt can create legal and cost risks.
Businesses can reduce future recovery problems by checking customer credit, agreeing payment terms in writing, invoicing promptly and keeping reliable records of delivery and acceptance. Contracts should address interest, suspension of services, retention of title where suitable, dispute procedures and the parties’ legal identities. Internal escalation points also help: an overdue invoice should move from account management to a formal recovery process before evidence becomes difficult to obtain or the limitation period becomes an issue. Decisions on litigation should weigh the value of the debt, the evidence, the debtor’s ability to pay and the likely enforcement costs.