Practical advice for collecting debt from a customer

Updated: 22nd November 2021

How can I recover debts owed to my business from a customer?

From friendly reminders to threats of legal action, the debt collection process is often a long and arduous journey for business owners. But you can improve the situation, and your chances of success, by putting in place some simple, robust credit control systems.

The credit control process begins well before you have to chase payment - obtaining customers’ agreement to your terms and conditions, and sending out invoices as soon as work is complete, both offer you the best chance of receiving payment and operating with positive cash flow in the long-term.

If a customer doesn’t pay on time you’ll probably attempt to negotiate an instalment plan, but if they’re deliberately avoiding repayment, it’s unlikely to work. So here are a few other ideas to help you navigate a potentially tricky situation.

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Try to speak to them in person

Harassing your customer is not a good idea, and apart from being unlikely to recover the debt, it could lead to a legal complaint being made against you. Have all the relevant facts and documentation to hand when you phone your customer, and keep the calls short, polite, and to-the-point.

Send a series of written reminders

If the first polite reminder goes unheeded, and you have also spoken to your customer, you should send a series of written reminders finishing with a threat of legal action (as long as you intend to follow it through).


Paying for a mediation service can save you money in the long-run, and involves a trained person acting as conciliator between you and your debtor. If you do decide to take legal action, the court will prefer you to have attempted mediation beforehand.

Letter Before Action (LBA)

A Letter Before Action sent by your solicitor warns the debtor that you may take them to court if they do not pay by the date stated. This often achieves fast results if the customer is deliberately being slow to pay.

Debt Collection Agency

You may decide to pass the debt on to a debt collection agency. Some agencies charge a fixed fee for their services, whereas others prefer to take a pre-agreed percentage of the debt once it has been recovered.

Court action and County Court Judgements (CCJs)

You can make a claim through the county court, sometimes known as the ‘small claims court.’ If the debtor decides to defend themselves, a court hearing date is set when the judge will consider both sides of the argument.

On the other hand your customer may simply ignore your claim, in which case you can apply for a court judgement to be made. If they do not pay in 28 days, the court will issue the county court judgement against them. Also known as a CCJ, this remains on the debtor’s credit record for six years, and is taken into account when they apply for credit and other borrowing.

Enforcement measures

Should your debtor fail to pay the judgement debt, you are entitled to take various forms of enforcement action to recover your money. These might include:

  • Using bailiff services and High Court Enforcement Officers to recover your money
  • Obtaining a charging order against their property – this means that the debt will be repaid from the proceeds if they sell or remortgage their home
  • Attachment of Earnings if the debtor is an employee – this allows their employer to deduct payment in instalments from your debtor’s wages

Statutory demand for payment

A statutory demand provides the debtor with 21 days in which to repay. If this does not happen, you may be entitled to petition for the winding-up of their business if you are owed £750 or more, or bankruptcy of an individual if the debt amounts to £5,000 or more. Should a winding-up or bankruptcy order be granted, your debtor’s assets will be sold for the benefit of all creditors.

If you are experiencing difficulty in recovering a debt, or would like more information about reducing the incidence of bad debts in your business, call one of our experts. Real Business Rescue provide director advice online, over the phone, or in-person at one of our 100 UK offices or a place of your convenience.

Keith Tully


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