Recovering a business debt: demands, negotiation and when to sue

Unpaid invoices tie up cash and time. A clear, escalating process recovers most debts without court — and puts you in the strongest position if court becomes necessary.

Step 1: get your paperwork in order

• The contract, purchase order or email agreement.
• Delivery notes or proof of service.
• Invoices, statements and any acknowledgement of the debt.

Step 2: formal demand

A lawyer’s letter of demand, setting out the amount, the basis of the claim and a short deadline, is often enough to prompt payment or a payment plan.

Step 3: negotiate — on your terms

• Agree instalments in writing, with a clear default clause.
• Ask for security (post-dated cheques, guarantees or collateral) for larger sums.
• Consider a consent judgment so default can be enforced quickly.

Step 4: court

Where liability is clear, faster procedures such as the undefended list may be available in some courts. Against companies, a statutory demand and winding-up petition can be powerful — but must be used carefully.

Checklist

• ☐ Documents assembled
• ☐ Demand letter sent
• ☐ Payment plan secured in writing
• ☐ Court option assessed

Every situation is different — for advice on yours, speak with our team in confidence.