When All Else Fails - Debt Recovery

If, despite your best efforts, you have invoices outstanding, don’t take it personally. According to research 88% of UK businesses have been affected by late payments.

So how does your company go about recovering the monies that are outstanding?

Option One - Use a reputable debt recovery company

In terms of cost this is often the most effective option, as many agencies will charge a fixed percentage of the debt when it is settled. If payment is not forthcoming, an agency will usually instruct solicitors to pursue the claim in court. A good agency will have the experience to rapidly escalate your claim and will be able to advise you on the best way to approach the recovery. Typically you will not be expected to pay for the time spent in recovery as many agencies offer a no collection, no commission service.

Be warned that a small number of rogue recovery agencies operate in the UK, so you should investigate any potential agency prior to instruction. Be very, very wary of any company that requests payment of significant fees in advance, or asks for a membership or debt placement fee to be paid.

Be sure to avoid any agency that has any County Court Judgments registered against it, or any newly established companies.


  • Having an agent assisting in recovery of funds will free up company time to concentrate on other clients
  • There are no up-front charges and a percentage is payable on collection only
  • A good agency will not alienate your customers - in fact, they may help you to retain them
  • Can place accounts with firms of solicitors for legal action if and when required


  • Choosing a rogue agency will lose you customers and could cost you significant amounts in lost time and money
  • Unscrupulous DCAs have been linked to convicted fraudsters and violent career criminals
  • When choosing an agent it is always preferable to seek out personal recommendations from other business owners.
  • Alternatively, look for an agency that is well established and endorsed by a professional group or accredited body.

If in doubt, treat a potential supplier the same as a potential customer - show due diligence and thoroughly investigate the shareholders and directors and their corporate history and never, ever pay in advance for debt collection.

Option Two - Issue proceedings with a solicitor

Many businesses will choose to immediately engage the services of a solicitor should they have issues with late payment. Most solicitors will send a ‘Letter Before Action’ (LBA) at a fixed cost and, if unsuccessful, will then suggest court action. Once judgment is awarded, the solicitor will continue to attempt to secure payment of the judgment by the debtor.

The major downside of using a solicitor is the cost. Almost all solicitors will expect to be paid for their time in dealing with the case irrespective of whether the amount is collected or not. Also, if a defense is submitted you will have to pay for the solicitor to refute this, usually at an hourly rate in excess of £100 per hour. Once judgment is secured, an experienced commercial litigation solicitor will be able to advise you on the best way to proceed with enforcement, as simply gaining judgment is often still not enough to get the debtor to pay up.


  • An LBA may be enough to make the debtor pay
  • Court costs are fixed and recoverable from the debtor, if they pay
  • Experienced counsel will be able to advise on the best method of enforcement


  • Whilst court costs are fixed, the solicitor’s hourly rate is not and for amounts less than £10,000 the solicitor’s charges are generally not recoverable
  • Inexperienced 'high street' solicitors may not have the specialised commercial litigation knowledge required in a contested case
  • Can be prohibitively expensive for disputed amounts under the £10,000 'small claims' limit

Option Three - Issue proceedings ‘in-house’

The final option for recovery is to issue proceedings without a solicitor. This has recently been made much easier as you can now make a money claim online. The advantages are no extra legal fees and you maintain complete control over the costs at all times. The main disadvantage is the lack of guidance if a defense is received or the debtor engages a solicitor, or if the judgment of the court and subsequent demands for payment are ignored.

There are unseen costs of in-house litigation to be aware of. For example, if you spend time in litigation it will reduce the time your company can devote to existing paying customers and potential new clients. Unfortunately, securing judgement can often be the  easiest part of the recovery, and if the debtor ignores the ruling it will be up to you to decide on the best way to proceed. Will you use a bailiff or a High Court enforcement officer? Will you seek a charging order, or potentially pursue an oral examination by the court?  Different situations will require radically different approaches and, if you go the in-house route, you will need to be prepared to research and fund any potential course of action.


  • Proceedings can be issued online in minutes
  • Costs are fixed by the courts
  • Basic guidance is available from the courts or online


  • Can be extremely time-intensive, especially if a defense is filed
  • May be difficult to recover funds if the judgment is not paid as directed
  • Contested cases or those requiring expert witnesses may be moved to another track (court) and you could find you still need a solicitor

If you have not already ascertained the credit worthiness (or not) of any client with unpaid invoices, now would be a good time to start. After all if your errant customer has no money or worse, a string of unpaid CCJs then you will need to weigh up the risk of increasing your potential loss if the account and charges remain unpaid.

You can get more information on chasing payment in part nine of the managing chasflow guides from the ICM & BIS here.

Over 150 Years Of Industry Experience

Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.

Image Options by Jurgen Appelo is licensed under CC BY 2.0

© Safe Collections is a trading name of Safe Collections Limited. Incorporated 1984. Company Number: 01815264. VAT Number: GB407358159. All Rights Reserved.

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