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In-house escalation first
Before engaging external parties, exhaust your internal escalation: reminder call, formal written demand, credit hold, and a letter before action giving 14 days to pay. Many B2B debts — including substantial ones — are resolved at this stage, particularly if the debtor is a going concern that values your supply relationship or fears a CCJ affecting their credit profile.
Keep all correspondence in a single file. If you later need to demonstrate to a court or insolvency practitioner that you made reasonable attempts to collect, a well-documented trail is invaluable.
Commercial debt collection agencies
Debt collection agencies (DCAs) take over the chasing process on your behalf, typically in exchange for a percentage of what they recover (commonly 10–25% for commercial debts). They have no additional legal powers but are often more persistent than an internal accounts team and the change of correspondent sometimes prompts payment. For smaller debts where legal action is disproportionate, a DCA may be cost-effective.
Ensure any DCA you engage is a member of the Credit Services Association and operates within the FCA's debt collection guidance (which applies to commercial as well as consumer debts). You remain legally responsible for how debts are collected in your name.
County Court proceedings
For debts up to £100,000, you can file a Money Claim Online (MCOL) through the County Court system without a solicitor. The court fee is proportional to the claim value. If the defendant does not respond or defend within 14 days, you can apply for a default judgement. A County Court Judgement (CCJ) can then be enforced via: a warrant of control (bailiffs seizing assets), a third party debt order (freezing bank accounts), or a charging order (securing the debt against property).
For complex or high-value claims, instruct a solicitor. They can also advise on whether the defendant has assets worth pursuing before you incur court costs.
Statutory demand and winding-up petition
For undisputed debts of £750 or more owed by a limited company, you may serve a statutory demand. If the company fails to pay, secure, or compound the debt within 21 days, it is deemed unable to pay its debts. This allows you to file a winding-up petition at the High Court — a serious step that is publicly advertised and can cause the company's bank to freeze its accounts.
Winding-up is a last resort: it is expensive (petition fee £302 plus solicitor costs), it destroys the trading relationship permanently, and if the company is insolvent you may recover only a fraction of the debt as an unsecured creditor. Use it where the debt is substantial, the relationship is already broken, and you believe the company has realisable assets or directors whose conduct warrants investigation by an insolvency practitioner.
Frequently asked questions
Can we charge the customer for our debt collection costs?
You can claim reasonable debt recovery costs under the Late Payment of Commercial Debts Act on top of the fixed compensation amounts. 'Reasonable' costs typically means a DCA's commission or a solicitor's time at standard rates — not punitive charges. Include the basis for any claimed costs in your demand.
Does a CCJ affect the debtor company's directors personally?
A CCJ is against the company, not the directors. However, it affects the company's credit profile and is publicly searchable, making it harder for the company to obtain credit or win contracts. If directors personally guaranteed the debt, you have a separate right of action against them.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.