Debt recovery

Recover your business debts without the bailiff

Money is the fuel for any business. Whether we have planned for it or not there comes a time when a client hasn’t paid on time. And it needs to be resolved. First off you’re probably thinking to get the heavyweights in, and whilst a bailiff can recover any non-payments it will ultimately end up costing you more long term.

If you choose to go down this route then be aware that bailiffs and debt collection agencies charge for both their time and take a percentage of the debt owed. Whilst many businesses outsource their debt collection, it is possible to recover business debts without involving a third party.

Consider the value of your debt  

Although money is vital in any circumstance there are some debts which are more concerning and vital than others. If the payment owed is less than £100 you may consider writing off this debt from a client’s account. However, be wary of this option as it may set a precedent for others to follow suit and you could set yourself up for more financial losses.

For any payment it’s necessary to understand the reason why a client hasn’t paid on time. If this is to do with the service or goods your client requested then it may be that it can be resolved easily by having an open discussion if they weren’t satisfied. The client may have debt issues and you may be able to reach an agreement as to how the debt is paid back. This will then allow you to rearrange the payment schedule to suit both parties.

Investigate with diplomacy

You may wish to carry out an investigation into why payments are missed or you are concerned as to a client’s financial intentions. It is possible to request that the local court check if there are any County Court Judgements against a business in the UK if you are unsure on their credit history. If they are found to have a debt relief order against them then there is often little point pursuing them as you are unlikely to recover the debt.

It’s important to be diplomatic throughout the process of collecting debts. If you find they are facing financial difficulties then consider discussing other payment options and try to reach an agreement.

Be clear

Always make your intentions clear when attempting to recover your business debts and ensure any agreement you reach is confirmed in writing. This way confirmation is clear and you have further evidence should you require it.

You may also wish to keep evidence of purchase order requests, delivery notes and payment reminder notifications. Before taking legal action discuss the quality of evidence with a solicitor to ensure you have enough proof that payments have been avoided.

Know your interest rights

You are within your rights to ask for interest on late payments but it’s essential to know where you stand before you start picking numbers off the top of your head. Commercial debts are legally covered by the Late Payment of Commercial Debts Act 1998, this covers businesses to request interest payments to be paid back at the rate set by the Bank of England. You can only claim for interest under the act if you’ve not specified interest terms in your own payment contract.

Alternatively, late payment clauses can be included in initial contracts to advise the client of the steps taken if late payment occurs. If this is your chosen method then make sure it is included in all contracts, terms and conditions and invoices which are sent to the client to ensure the policy is clear.

Create a late payment routine

In business, and especially when it comes to finance, it’s always best to cover every eventuality. Ensure you have a late payment routine in place and your team are aware of the process for chasing payments. This may include sending reminders, emails and calling clients to request payment all within a reasonable time frame which is determined within the plan.

If payment still hasn’t been made then it may be worth chasing payments further up the hierarchy system. Often those in high level positions have authorisation to make payments quickly. Ensure you keep conversations civil, in particular, if you wish to maintain and continue a good working relationship.


Prevention is always better than having to attempt to cure the problem. Ensure you keep detailed records on file for all clients or those you will receive payment from. This should include; name, address, detailed company information, contact number and account department contact. You can also run company credit checks remotely from sites such as First Report which will allow you to see a company’s relationship with its suppliers.

It’s also important to ensure you keep up a good relationship with the client throughout your time working together. By building up a good rapport you will hopefully become aware sooner if something isn’t quite right.

Ultimately if you avoid bailiffs you are more likely to retain a better customer relationship and avoid unwanted legal costs. Make sure you speak to a qualified accountant to receive the best advice on running your business.