Legal News | 28.06.23
How to recover unpaid invoices
Whether you are a director of a multinational company or an individual sole trader, there is probably one painstaking problem you have in common: chasing unpaid invoices.
Recovering money from invoices that have been unpaid can be difficult and time-consuming, and is often a sensitive issue. It is important to strike a balance between business demands and business relations. Sometimes, despite best efforts, there will be clients or customers that avoid or delay payment requests; either because they do not have the funds to pay, or they intentionally delay their payments to be able to manage their own cash flow. Whatever the reason, it is important to understand why they have not paid before issuing payment demands. If you still haven’t been paid on a late invoice it’s time to act.
There are various options for you to consider. Firstly, if the debt is undisputed and over £750 for companies and £5,000 in aggregate for individuals, you can serve a statutory demand on the debtor.
A statutory demand permits the debtor 21 days to make the payment. Should they fail to pay or communicate any resistance to the demand, you can petition to the court for a winding up order or bankruptcy order.
Now, should you anticipate that the debt could be disputed and arguments around the amount payable may arise, then you will need to issue a pre-action letter as the first step in recovering the debt via the County Court.
Once the pre-action letter has expired, you may decide to proceed with issuing a claim against a debtor in the courts, however, this is not without its perils. You will need to factor in legal costs, settlement discussions, witness statements and adverse cost orders should you not be successful.