At SHL we understand the frustration that businesses face when trying to recovery money that they’re owed, especially when goods or services have been provided to another business.
Cash flow is a vital aspect of a business’s growth and market presence which can be hindered when other businesses fail to pay for what you are owed. It can then become a long and tedious process to recovery that money.
Here at SHL we are able to provide simple and comprehensive debt recovery advice for a fixed fee at each stage. We offer flexible services to meet your business needs, and have provided an overview of the process of recovering a business to business debt below. Please note that the procedure is slightly different if you are a business and seeking to recover a debt from an individual or sole trader.
Stage 1 – Letters Before Action (‘LBA’)
This is the first stage in recovering your unpaid business to business debts. An LBA is a formal letter that requests payment of the debts owed to your business and also provides a warning to your debtor that a Court Claim will be issued for failure to pay.
The LBA will set out the amount of debt your business is owed and provides a timescale for the debtor to repay you (usually 7, 14 or 30 days). This is an essential requirement in recovering your outstanding sums.
If the debt still remains outstanding after the timescale given in your LBA, the next stage to recovering your debt will be to issue the debtor with a Letter of Claim.
Stage 2 – Letter of Claim
The second stage for recovering your debt is to send to the debtor a Letter of Claim which complies with the relevant Pre-Action Protocol, if they fail to make payment or contact after the LBA was issued.
This is another formal letter which will set out the total amount of debt owed plus any interest or late payment fees, were the debt arises from and how the debt can be satisfied (i.e. paid in full or by instalments).
This Letter of Claim will also supply your debtor with an Information Sheet, Reply Form and Financial Statement in compliance with the Pre-Action Protocol for debt claims. The debtor has a required 30 days in which to reply or satisfy the debt.
If, following the Letter Before Action and Letter of Claim you still have not received a response or payment of the debt, formal Court proceedings can begin.
Stage 3 – Court Proceedings
This third stage involves the drafting of legal proceedings for issuing with the relevant County Court or High Court.*
Once proceedings have been drafted and sent to the Court, the Court will then serve the pleadings on the debtor. For the purposes of a Court action, the creditor i.e. the party owed the money will be known as the Claimant and the debtor, i.e. the party owing the money, will be referred to as the Defendant.
The Defendant then has 14 days in which to either respond and submit a defence and/or counterclaim OR file and acknowledgement of service which indicates that they need more time before replying to the proceedings.
If the Defendant fails to pay the outstanding debt or fails to respond to the Claimants claim within the required 14 days, judgement in default can be applied for. If successful in obtaining a judgement in default, the Claimant may demand immediate payment of the outstanding sums or seek enforcement action(s).
Stage 4 – Enforcement
Following a decision by the Courts to award a judgement in default, the Defendant will either have a County Court Judgement (‘CCJ’) or High Court Judgement (‘HCJ’) against them.
There are a variety of enforcement options and debt collection methods available to creditors. The options depend on the circumstances of each case but could include:
- Winding Up Proceedings
- Bankruptcy Proceedings
- Statutory Demands
- Seizure of assets and/or goods
- Charging Orders
We are able to advise you on the best course of action to suit your business and the circumstances of your case.
*The value of the debt (plus any interest) determines the Court issue fee.
|Claim amount||Court fee|
|Up to £300||£35|
|£300.01 to £500||£50|
|£500.01 to £1,000||£70|
|£1,000.01 to £1,500||£80|
|£1,500.01 to £3,000||£115|
|£3,000.01 to £5,000||£205|
|£5,000.01 to £10,000||£455|
|£10,000.01 to £100,000||5% of the claim|
|£100,000.01 to £200,000||5% of the claim|
|More than £200,000||£10,000|
If you have a query regarding the recovery of a debt and would like to discuss, then please email email@example.com or telephone 01744 454433 to arrange a FREE consultation. Legal fees will be discussed at the initial consultation.