Late-paying customers can put real strain on a small business — affecting your cash flow, your growth and your peace of mind. The good news is that the law gives you clear tools to recover what you’re owed. This guide explains debt recovery for small businesses in England & Wales.
Start with a Letter Before Action
Before going to court, you should send a formal demand for payment. For business-to-consumer debts this follows the Pre-Action Protocol for Debt Claims; for business-to-business debts a clear, firm letter before action is expected. A solicitor’s Letter Before Action sets out the debt, gives a deadline, and warns of court proceedings — and it often prompts payment on its own, because the debtor sees you mean business.
You Can Claim Interest and Costs
Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses can usually charge statutory interest (8% above the Bank of England base rate) on overdue commercial invoices, plus a fixed compensation sum (£40–£100 per invoice) and reasonable recovery costs. This means chasing a debt doesn’t have to leave you out of pocket.
If Payment Still Doesn’t Come
If the debtor ignores your demands, the next steps can include:
- County Court claim — leading to a County Court Judgment (CCJ) if successful.
- Enforcement — bailiffs/enforcement agents, attachment of earnings, or a charging order.
- Statutory demand and insolvency action — for larger debts, a powerful way to prompt payment.
We can also help with invoice recovery and pre-action steps and advise on the most cost-effective route for your situation.
Frequently Asked Questions
How long do I have to recover a business debt?
Most contract debts can be pursued for up to six years from when the debt became due, but acting quickly improves your chances of recovery.
Can I charge interest on late invoices?
Yes. For commercial debts you can usually charge statutory interest at 8% above base rate, plus a fixed compensation sum and reasonable recovery costs.
What is a CCJ?
A County Court Judgment is a court order confirming the debtor owes you money. It can be enforced and also affects the debtor’s credit rating, which often encourages payment.
Do I need a solicitor to recover a debt?
Not always, but a solicitor’s involvement adds weight, ensures the correct procedure is followed, and improves your chances of recovering the debt and your costs.
Recover What You’re Owed
Don’t let unpaid invoices hold your business back. Din Solicitors helps businesses across England & Wales recover debts quickly and professionally. Explore our debt recovery service, get in touch today, or call 01422 647175.