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Recovering Bad Debts

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The late payment of commercial invoices will have an adverse effect on creditor companies now more than ever as the pandemic has caused a strain on the economic standing of many businesses. It is vital that unpaid invoices are collected in swiftly to ensure a steady cash flow.

It is prudent to undertake a regular review of unpaid accounts so that you can identify any problematic debtors at an early stage and commence recovery action where required.

Where an overdue or problematic debt has been identified, it is recommended that you issue a letter before action to the debtor company stating that the invoice is overdue for payment and requesting that payment be made within 7 days failing which court proceedings may be issued. Often the threat of court action is enough to result in payment being made.

Pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 you are able to charge interest on unpaid invoices at the rate of 8% above the Bank of England base rate from the date when the invoice fell due to the date of payment. If you have been prolonging the collection of unpaid invoices due to company closures throughout the lockdown period then you may be entitled to a substantial amount of interest, particularly where large sums are overdue.

To assist you with the recovery of some of the debt collection costs, you are entitled to a fixed sum when recovering a late commercial payment on top of the interest charges aforementioned. The fixed sum varies between £40 and £100 depending on the amount of the invoice debt. This charge is recoverable for each invoice which is overdue.

We offer a fixed fee service for the drafting of a letter before action. The charges are as follows:-

  • Debts up to £1,000.00 - £15.00 plus VAT
  • Debts between £1,000.01 and £4,999.99 - £18.50 plus VAT
  • Debts over £5,000.00 - £25.00 plus VAT

Once instructed we will carry out a company search to check that the company is not in liquidation or whether there are any active proposals to strike the company off.

If you would like to instruct us to send out a letter before action then please complete our instruction form and send it to Jessica McSorley or Samuel Pedley by email ( ( together with a copy of the invoice(s) and a statement of account.

Find our instruction form here