Commercial Debt Recovery Solicitors in Cardiff.

Yes — businesses have a statutory right to claim interest and compensation on late commercial payments under the Late Payment of Commercial Debts (Interest) Act 1998. Where one business owes another a debt for goods or services and pays late, the creditor can claim: statutory interest on the overdue amount at a rate set by reference to the Bank of England base rate plus a statutory margin; fixed-sum compensation for each late invoice, on a sliding scale depending on the size of the debt; and, where the fixed sum does not cover the reasonable costs of recovering the debt, the additional reasonable recovery costs. These rights apply automatically unless the contract provides a substantial contractual remedy for late payment. Many businesses do not claim their full entitlement to statutory interest and compensation, leaving money on the table. The right to claim interest and costs also strengthens a creditor's negotiating position. Including clear payment and interest terms in your contracts reinforces these rights.

Reducing the risk of bad debts starts long before a debt becomes overdue. Practical measures include: carrying out credit checks on new customers before extending credit; agreeing clear written terms of business setting out payment terms, interest on late payment, and what happens in default; invoicing promptly and accurately; operating disciplined credit control, with prompt reminders and a clear escalation process; setting and reviewing credit limits; considering security or personal guarantees for significant credit, particularly with newer or higher-risk customers; retaining title to goods until payment (a retention of title clause) where appropriate; and acting quickly when payments fall overdue, rather than letting arrears build up. Including a clear right to statutory or contractual interest reinforces your position. Good credit management does not eliminate bad debts entirely, but it significantly reduces them and puts your business in a far stronger position to recover what it is owed when problems do arise. Well-drafted terms of business are a worthwhile investment.

Obtaining a judgment does not guarantee payment — if the debtor still does not pay, you must enforce it. The main enforcement methods are: taking control of goods, where enforcement agents seize and sell the debtor's assets; a third-party debt order, freezing and recovering money owed to the debtor by a third party such as its bank; a charging order, securing the debt against the debtor's property or other assets, which can be followed by an order for sale; an attachment of earnings order (for individual debtors), requiring deductions from their earnings; and, for companies, insolvency proceedings such as a winding-up petition. The most effective method depends on the debtor's assets and circumstances — there is little point pursuing enforcement against a debtor with no assets. It is often sensible to obtain information about the debtor's financial position before deciding how to enforce. Taking advice on the best enforcement strategy maximises the prospects of actually recovering the money.

The cost of commercial debt recovery depends on the nature of the debt and the steps required to recover it. For the recovery of undisputed commercial debts up to £100,000, our charges are set out on our debt recovery pricing page, in accordance with the transparency requirements that apply to this type of work — please refer to that page for details of our fees and the typical stages and timescales involved. Where a debt is disputed, or falls outside the scope of that pricing information, the matter is handled as commercial litigation and we charge on our usual basis, providing a written cost estimate at the outset. In many cases, the costs of recovery — including statutory compensation and reasonable recovery costs under the Late Payment of Commercial Debts (Interest) Act 1998 — can be added to the claim and recovered from the debtor. We will always explain the likely costs, and the prospects of recovering them, before taking action so you can make an informed commercial decision.

If a business owes your company money, there are several steps you can take, escalating as necessary. Start with clear internal credit control — chasing the invoice with reminders and statements. If that fails, the next step is usually a formal letter before action from solicitors, demanding payment by a deadline and warning of proceedings. If the debt remains unpaid and is not genuinely disputed, the options are: issuing court proceedings to obtain a judgment, which can then be enforced; or, for an undisputed debt above the statutory threshold, serving a statutory demand and potentially presenting a winding-up petition against the debtor company — a powerful tool, but one that must not be used where the debt is genuinely disputed. You can also usually claim statutory interest and compensation for late payment. The best route depends on the size of the debt, whether it is disputed, and the debtor's financial position. Early legal advice helps you choose the most effective and cost-efficient approach.

If a debtor genuinely disputes the debt, the approach changes significantly. Insolvency-based routes — statutory demands and winding-up petitions — must not be used for a genuinely disputed debt, as that is an abuse of process. Instead, a disputed debt must be pursued as an ordinary civil claim: the creditor issues court proceedings, the debtor files a defence, and the dispute is resolved through the litigation process, potentially leading to a trial. The key question is whether the dispute is genuine and substantial, or merely a tactic to delay payment. A bare assertion that the debt is disputed, without any real basis, will not prevent the use of insolvency procedures — but a genuine dispute will. Distinguishing a genuine dispute from a delaying tactic is a matter of judgment, and getting it wrong (by using insolvency procedures on a genuinely disputed debt) can be costly. Legal advice is important where a debtor raises a dispute, to choose the correct route.

If a debtor genuinely has no money or assets, even a successful judgment may be difficult or impossible to enforce — a judgment against a company with no assets, or an individual with nothing to take, may be worth little. This is why assessing the debtor's financial position before committing to recovery action is so important: spending money pursuing an insolvent or asset-less debtor can be throwing good money after bad. Before taking action, it is sensible to investigate the debtor's circumstances — through credit checks, company filings, and other enquiries. If the debtor is a company that is insolvent, the options may be limited to proving in any liquidation or administration as an unsecured creditor, where recovery is often minimal. In some cases, directors may be personally liable — for example, where they have given personal guarantees, or in cases of wrongful or fraudulent trading. Realistic advice about the prospects of recovery, before incurring further cost, is an essential part of sensible debt recovery.

A letter before action (also called a letter before claim) is a formal written demand for payment sent to a debtor before court proceedings are issued. It sets out the amount owed, the basis of the debt, and a deadline for payment, and warns that court proceedings will follow if payment is not made. It matters for two reasons. First, it is often effective in itself — a properly worded letter before action from solicitors frequently prompts payment, because it signals that the creditor is serious and prepared to litigate. Second, it is a required step: the pre-action protocol expects a creditor to send a clear letter of claim before issuing proceedings, and a creditor who issues proceedings without doing so risks costs sanctions. The letter before action should be clear, accurate, and give the debtor the information and time the protocol requires. It is usually the first formal step in any debt recovery matter.

A statutory demand is a formal written demand for payment of an undisputed debt, which is a precursor to insolvency proceedings. For a debt owed by a company, if the company fails to pay or reach agreement within 21 days of a statutory demand for a debt above the current statutory threshold, the creditor may present a winding-up petition. For an individual, a statutory demand can be a precursor to bankruptcy proceedings. A statutory demand is a powerful tool because of the serious consequences of ignoring it. However, it carries an important warning: a statutory demand must not be used to recover a debt that is genuinely disputed on substantial grounds, or where the debtor has a genuine cross-claim. Using insolvency procedures to pressure payment of a disputed debt is an abuse of process, can be challenged by the debtor, and can result in costs penalties against the creditor. Statutory demands should only be used for clear, undisputed debts and with legal advice.

A winding-up petition is an application to the court to have a company compulsorily wound up (liquidated) on the ground that it is unable to pay its debts. It is one of the most powerful tools available to a creditor, because the consequences for the debtor company are severe — and the threat of a petition often prompts payment of an undisputed debt. A petition can usually be presented where a company has failed to satisfy a statutory demand for an undisputed debt above the statutory threshold, or where a judgment debt remains unpaid. However, a winding-up petition is appropriate only for clear, undisputed debts: presenting a petition for a debt that is genuinely disputed on substantial grounds is an abuse of process, can be restrained by injunction, and can lead to serious costs consequences for the creditor. A petition is also a blunt instrument — if the company is wound up, the creditor ranks alongside other creditors and may recover little. It should be used strategically and with legal advice.

Commercial debt recovery is the process of recovering money owed to a business by another business or individual. It typically follows a series of escalating steps: first, a formal demand for payment (a letter before action); then, if the debt remains unpaid and is not genuinely disputed, court proceedings to obtain judgment, or in some cases insolvency-based pressure such as a statutory demand; and finally, if necessary, enforcement of any judgment obtained. The right approach depends on whether the debt is disputed, the amount owed, the debtor's financial position, and the commercial relationship. Many debts are recovered at the letter before action stage, without the need for court proceedings, once the debtor realises the creditor is serious. Effective debt recovery combines firm, prompt action with a realistic assessment of the prospects of actually recovering the money. Taking advice early — particularly for larger or disputed debts — helps choose the most effective route.

The pre-action protocol sets out the steps a creditor should take before issuing court proceedings to recover a debt. For debts owed by individuals and sole traders, the Pre-Action Protocol for Debt Claims applies and is relatively prescriptive: it requires the creditor to send a detailed letter of claim including specified information and a reply form, and to allow the debtor 30 days to respond before proceedings are issued. For debts between businesses (where the debtor is a company), the general Practice Direction on Pre-Action Conduct applies, which is less prescriptive but still requires the creditor to set out the claim clearly and give a reasonable opportunity to respond. In both cases, the purpose is to encourage payment or resolution without litigation and to ensure the issues are clear if proceedings become necessary. Complying with the relevant protocol is important — failing to do so can result in costs sanctions even if the creditor ultimately succeeds.