How to deal with commercial debt


If you offer credit as a normal part of running your business, there is always the risk that a customer does not settle it on time. In extreme cases customers may sometimes fail to pay at all.

It is important to manage these commercial debts in order to maintain consistent cashflow.

Reaching an amicable resolution

The first stage is always to contact the person or organisation who owes you the money. It may be that they are experiencing cashflow problems themselves, but will be able to pay you once they have been resolved.

In many cases, a friendly letter or phone call will resolve the matter, and go a long way to ensuring you have a good business relationship. In many businesses it is worth creating a simple debt-collection process that you can follow as a matter of routine.

If routine letters are not successful however, you may want to turn to a solicitor for help. There are many specialist practices that have extensive experience of recovering unpaid commercial debts.

They can often be very cost effective, especially if the debt is significant, and many firms are willing to take on large numbers of small cases at once.

Taking legal action

A business solicitor can draw up an official letter that you can send to the company or individual that owes you the money. Often the threat of legal action will be enough to convince your customer to prioritise paying you back.

When solicitor’s letters have not been successful, you can then use the courts to recover all or part of your commercial debt. To do this you use the small claims track if the amount you are owed is less than £10,000.

The small claims track is a special procedure within your local county court and it is designed to be easy and quick to use. If your claim is for more than £10,000, however, you will need to use either the fast-track process for debts of up to £25,000; or the multi-track process if the amount owed is more than £25,000.

You can learn more about the courts process on our Civil Procedure Rules page.

In all cases the person or business that owes you money can contest the claim you are making. If they do, the services of a commercial solicitor will be useful as they can represent you at every stage of the court proceedings.

If a breach of contract is alleged, or a counterclaim instigated, the case can become difficult to navigate. Using a solicitor with experience of the claims process will be invaluable. Their services will ensure you get all or most of the money that is owed to you.

If you would like to know more about making a claim, visit our civil litigation page.

If you would like to obtain legal advice about commercial debts, Contact Law can put you in touch with a local specialist business solicitor free of charge. So, if you have any questions or would like our help in finding local business solicitors please call us on 0800 1777 162 or complete the web-form above.

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