How to recover debt from a company - A short guide
According to recent research, the average bad debt amongst UK SMEs has jumped 61%, from £10,329 in Spring 2022 to £16,641. Additionally, it is reported from the same research, that today, SMEs each have an average of £68,413 owed to them in unpaid invoices.
Furthermore, according to recent statistics, around 757,000 companies in the UK now have some debt, compared to 305,000 before the Covid-19 pandemic.
These figures provide insight into the increasing levels of debt and bad debt exposure among UK companies.
So what should you do to recover money you’re owed from a company? Expert Commercial Law explore your options on how to recover debt from a company.
How to recover debt from a company
Having debt owed to you or your company can be frustrating and may lead to cash flow issues for your business.
Luckily, there are a number of debt recover options available to help you recover your unpaid fees.
To recover debt owed by a company under English law, you can follow a structured approach that involves several key steps, incorporating the use of legal action, court claims, and enforcement action to ensure the recovery of the money you’re owed.
Start by making a phone call or sending a reminder to the company owing you money. This initial step can sometimes prompt payment without the need for further action.
Letter Before Action (LBA):
If the initial contact does not result in payment, the next step is to send a letter before action. This formal letter should outline the debt owed, the basis of the claim, and give the debtor 14 days to respond or settle the debt. This step is crucial as it signals your intent to take court action if the debt is not paid.
Issue a Statutory Demand:
For debts over £750, you can issue a statutory demand. This is a formal demand for payment within 21 days. Failure to comply can lead to insolvency proceedings and winding up petitions against the company.
Filing a Court Claim:
If the debt remains unpaid after the letter before action, you can initiate court proceedings to recover the debt. You can make a county court claim for most debts. For larger debts, over £100,000, or if the case is complex, it might be appropriate to start the claim in the High Court.
Court Proceedings and Judgment:
Once a claim is filed, the debtor has 14 days to respond. If they fail to respond or dispute the claim, you can request a judgment from the court. If the court rules in your favor, a County Court Judgment (CCJ) or High Court judgment will be issued against the debtor.
If the debtor still does not pay following a judgment, you can take enforcement action to recover the debt. Options include:
- Execution against goods: Using bailiffs or High Court Enforcement Officers to seize the debtor’s assets.
- Charging Order: Securing the debt against the debtor’s property.
- Third Party Debt Order: Freezing funds in the debtor’s bank account
How can Expert Commercial Law assist with debt recovery?
If you are looking for assistance or advice on how to recover debt from a company, the solicitors on our panel can be of assistance.
All of the commercial dispute solicitors on our panel have experience and expertise in debt recovery.Each solicitor is vetted before being allowed onto our panel, and we only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA).
Please note we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.
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Please note, we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.