Recovering Unpaid Invoices: When to Instruct a Solicitor | Acumen Law
Recovering Unpaid Invoices: When to Instruct a Solicitor
Overdue invoices are a cash flow problem and a legal one. The route you choose depends on who owes the money, whether the sum is disputed, and how quickly you need an enforceable outcome. This note sets out the framework that applies in England and Wales and the points that usually justify instructing a solicitor.
The pre-action framework
- Business debtor that is not an individual: The general Practice Direction on Pre-Action Conduct expects a letter before claim and a reasonable response window. As a guide, 14 days is reasonable in a straightforward case and up to three months where issues are complex.
- Individual or sole trader debtor: The Pre-Action Protocol for Debt Claims applies. A creditor’s Letter of Claim must enclose the prescribed information sheet, reply form and financial statement. The debtor has 30 days from the date of the letter to reply, and extra time if they seek debt advice or request documents.
Where the wrong regime is used, the court can penalise on costs or pause the claim. Getting the first letter right often avoids proceedings. For further detail, see our separate article on drafting a letter before action for unpaid invoices here.
Interest and fixed sums you can add
For business to business supplies, the Late Payment of Commercial Debts legislation allows statutory interest at 8 per cent above the Bank of England base rate, running from the day after payment fell due. You cannot use it where a different contractual rate applies.
In addition to interest, a fixed sum is recoverable on each overdue invoice: £40 for debts under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. Reasonable additional recovery costs may also be claimed where the fixed sum does not cover them.
Keep a running schedule that shows principal, rate, daily rate and total.
Choosing a route: court claim or insolvency pressure
- County Court money claim: This is appropriate where the debt may be defended or where you will need a judgment to enforce. If the defendant does not acknowledge service or file a defence, default judgment is available under CPR Part 12. Cost recovery is limited on the small claims track and increasingly governed by fixed recoverable costs on higher tracks.
- Statutory demand and petition: A statutory demand is a short-form demand for undisputed sums. If unpaid after 21 days, a creditor may petition to wind up a company owing more than £750, or to bankrupt an individual where the debt is £5,000 or more. This route is not appropriate where there is a genuine dispute.
Enforcement, briefly
Once judgment is obtained, the CPR lists the main methods of enforcement: writ or warrant of control, third party debt order, charging order, attachment of earnings, and orders to obtain information. Selection depends on what the debtor owns and how they trade.
- Writ of control via High Court Enforcement Officers: Generally available for County Court judgments of £600 or more that are not regulated consumer credit. Often the quickest front-foot option.
- Third party debt orders: Intercept funds owed to the debtor by a bank or customer.
- Charging orders: Secure the judgment against land or securities and consider orders for sale.
- Attachment of earnings: For individual debtors in PAYE employment.
- Orders to obtain information: Compel attendance to disclose means on oath, which can unlock asset intelligence for targeted enforcement.
Service and evidence that prevent avoidable setbacks.
- Ensure the correct legal entity and service address: For companies, service at the registered office by post is effective under section 1139 of the Companies Act 2006. Check the exact corporate name and number.
- Evidence bundle: Contract or terms, accepted purchase orders, delivery or service proof, invoices, statement of account, and a short chronology of chasers and payment promises.
- Interest and fixed sum schedule: Set out calculations clearly to minimise scope for argument on quantum.
Common pitfalls
- Using insolvency tools on a disputed debt. Individuals can apply to set aside a statutory demand where there is substantial dispute and courts may restrain company petitions used tactically.
- Wrong protocol. Issuing against a sole trader without the Debt Protocol pack risks delay and costs consequences.
- Costs expectations. Claims up to £10,000 are normally allocated to the small claims track, where recovery of legal costs is tightly limited. Factor this in before issuing.
When to instruct a solicitor
In practice, external input adds most value where one or more of the following applies:
- The debtor is an individual or sole trader, so the Debt Protocol pack and timetable must be followed.
- There is a potential dispute on quality, scope or price and you need to frame the issues and evidence before escalation.
- You need to preserve limitation or structure a quick issue followed by a stay to finish pre-action steps.
- Insolvency pressure is contemplated and you need to check the thresholds, the 21-day timetable and any risks of set-aside.
- Enforcement will matter because you suspect asset dissipation or require a tailored plan across writs, third party debtor orders or security.
Next steps for finance teams
- Assemble the documents listed under Service and evidence and confirm the correct legal entity.
- Decide whether the debt is undisputed. If so, prepare a protocol-compliant demand with a measured deadline. If not, exchange the key documents and consider ADR under the pre-action guidance.
- Keep a live interest and fixed sum schedule and diarise limitation.
- If there is no response or you need speed, choose between a money claim and an insolvency route in light of dispute risk, thresholds and recoverability.
About Acumen Law
Acumen Law, based in Brighton and Hove, advises SMEs and owner-managed businesses on all aspects of debt recovery and enforcement, from pre-action compliance to enforcement strategy.
If you have any questions about this topic or debt generally, please contact us.
