How To Recover An Unpaid Invoice: The First Legal Steps Businesses Should Consider
When a customer fails to pay an invoice on time, it can be difficult to know what to do next. Should you continue chasing payment internally? Should you send a Letter Before Action? Or is it time to issue Court proceedings?
The right approach will depend on the circumstances, but taking the appropriate action at the right time can make a significant difference to the outcome.
When Internal Credit Control Is No Longer Enough
For many businesses, the first stage of recovering an unpaid invoice is internal credit control. This may include sending payment reminders, statements of account, making telephone calls and following up on agreed payment dates. However, when payment promises continue to be broken, communication slows or repeated reminders fail to produce results, it may be time to consider formal legal debt recovery.
The Role of a Letter Before Action
In commercial debt recovery matters, the first formal legal step is a Letter Before Action (LBA). A professionally drafted Letter Before Action sets out the amount owed, the legal basis of the claim, any statutory interest or compensation that may be recoverable, a clear deadline for payment and confirms that legal proceedings may be issued if the debt remains unpaid. It demonstrates that the matter has moved beyond routine credit control and into the legal recovery process. In many cases, this is enough to encourage payment without the need for court proceedings.
At Lovetts, our Letter Before Action service starts from just £1.50 + VAT and 86% of matters are resolved before Court proceedings become necessary.
When Court Proceedings Become the Appropriate Next Step
Where a Letter Before Action does not result in payment, the next step in the legal process will be to issue a County Court claim. Deciding whether to commence legal proceedings is about more than simply issuing a claim. Experienced debt recovery solicitors will consider the strength of the evidence, whether the debt is disputed, the debtor’s financial position, the likely prospects of recovery and whether litigation represents the most commercially appropriate course of action.
A Strategic Approach to Commercial Debt Recovery
At Lovetts, we have been helping businesses recover unpaid invoices and commercial debts for more than 30 years. From our low-cost Letter Before Action service through to County Court proceedings and enforcement, we provide commercially focused legal support tailored to the circumstances of each case.
If your business is dealing with unpaid invoices, late payment or commercial debt recovery, learn more about our services or sign up for our Letter Before Action service today.