Debt recovery: don’t fall to the back of the queue

05 Apr 2017

The squeaky wheel gets the most oil. This is true in many situations, including debt recovery. The fact is that when cash flow is limited, not everyone can be paid on time, and those who wait patiently are often the ones to miss out, falling to the back of the queue for payment. This can have serious, and sometimes irreversible, consequences.

Research undertaken by Amicus Commercial Finance found that around 70% of SMEs rely on prompt payment to maintain working capital. Indeed, 10% of SMEs fear being forced to close due to late payment. The same research found that 18% of SMEs had lost contracts as a result of cash flow problems, many struggled to pay debts (30%), suppliers (41%) and even staff (24%). Around 60% of SME invoices are paid late, with around 16% remaining unpaid after 90 days.

Engaging a law firm at an early stage to chase unpaid invoices can have a very real impact on the speed of payment and does not have to be an expensive exercise. In the experience of our specialist Debt Recovery team, the vast majority of debtors will pay on receipt of a Letter Before Action from a firm of solicitors.

It often surprises me how reluctant businesses can be to chase debtors or to escalate the issue by engaging a law firm. One explanation we often hear is that the debtor is a “good customer”; so it seems that the reluctance to chase a debtor may stem from a fear of rocking the boat. However, given the potential damage that can be caused to a business by late payment, can a tardy payer ever really be a “good customer”?

It seems, therefore, that receiving a letter demanding payment from a reputable law firm will often result in an unpaid invoice being pushed to the front of the queue, which is good news for the business, its employees and suppliers.

Further reading

Protecting your brand in post-Brexit UK

Blog, News & PR
Now the UK has officially left the EU, it's more important than ever for UK businesses to look after their brands. Robert Ganpatsingh explains what to consider
Read more Read

Lockdown 3.0: no exception, no eviction

Blog, Legal Updates
Hannah Joad looks at new regulations extending residential tenants’ protection from eviction.
Read more Read

Supporting employees through the next lockdown

Managing your employees through uncertainty and equipping them to thrive, remain engaged and feel part of a team environment, must be a HR priority for 2021.
Read more Read

Remote working and home security

Blog, News & PR
With a large proportion of the workforce now working from home, security arrangements for home workers need to be addressed - Robert Ganpatsingh explains
Read more Read
  • Brighton Office

    1 Jubilee Street


    East Sussex

    BN1 1GE

  • Gatwick Office

    Griffin House

    135 High Street


    West Sussex

    RH10 1DQ

  • Guildford Office

    Wonersh House

    The Guildway

    Old Portsmouth Road



    GU3 1LR

  • Horsham Office

    Ridgeland House

    15 Carfax


    West Sussex

    RH12 1DY

  • London Office

    6 New Street Square

    New Fetter Lane


    EC4A 3BF

  • Get in touch