8% of business debts are simply written off as bad debt

It is a staggering statistic that across all sectors, 8% of business debts are simply written off as bad debt. 

Debt recovery for any business is perceived as a loss leader.  Most businesses are resigned to accepting that with all the best will in the world, well-worded chaser emails and the drive to pull their company out of the vast financial hole formed by unpaid invoices, it is a futile and speculative punt.  This is even more pressing in a time of austerity, with non-paying businesses folding and creditors competing for scraps against companies in liquidation.

Whilst this is accepted, it shouldn’t be the reality. 

Regardless of who owes you money (i.e. an individual or a company), a well-drafted Letter of Claim will certainly escalate the temperature.  This, in itself, may do the trick.  After all, a robust Letter of Claim from a niche Commercial Litigation firm of solicitors is as much about the other side fearing that they will be sued as it is about explaining why they are liable.  If you find that your debtor is still playing hard ball, our experience is that offers to pay an invoice will follow once the threat of litigation becomes more real.  This can include preparing draft Particulars of Claim (essentially setting out your stall as to why you are entitled to money), informing the other side that you are ready to issue legal proceedings and offering a final opportunity before pressing the trigger.   

There has also been very topical guidance from the High Court as to whether parties can claim for lost management time on top of unpaid invoices. 

In the recent case of Zenith Logistics Services (UK) and others v Keates [2022] EWHC 1496 (Comm), the High Court set out a framework as to recovering wasted management costs.  This can be as simple as a company noting how many emails, phone calls, etc. were made.  This case establishes that senior members of staff or even junior members of staff being diverted away from their usual work is a business cost in addition to owed monies.

As well as monies for an unpaid invoice and damages for lost management time you can also claim late payment compensation and statutory interest, as well as for the costs of bringing the claim.

There are also avenues that could result in a director of a non-paying company being personally liable, even where their company is insolvent.

Our experienced Commercial Litigation lawyers have strength in depth as to litigation, with one having worked for a debt collection group of companies.  They therefore have the tactical insight and knowledge needed.  Getting a County Court Judgment (‘CCJ’), however, is simply a piece of paper until you get monies from your opponent.  As opposed to you instructing another firm specialising in enforcement after a case is ‘over’, we can assist you from inception to finish - enforcement of a judgment is very much an integral part to our services, and we have a war chest of enforcement tools to consider. 

For Debt Recovery matters, Smooth Commercial Law work on a fixed fee basis, whether this is preparing a Letter of Claim, or drafting Particulars of Claim so as to issue legal proceedings.  We are also the broad shoulders to help support and advise on each step.  

If you’d like to discuss a potential matter, we’d be happy to talk you through what options you have to recover an unpaid debt or contractual dispute.