When a company will not pay, you have more options than chasing and hoping. Here they are in order, with the points where each one does and does not help.
A limited company that owes you money and will not pay is one of the most frustrating positions to be in. The people you dealt with may still be trading, answering the phone and promising payment next week. But the debt belongs to the company, and the route to getting paid runs through it.
Here are the options, roughly in the order to use them.
Before anything else, look the company up on Companies House. It is free, and it tells you its registered name, its company number, its registered office and whether it is active, in liquidation or dissolved.
This decides everything that follows. If the company is active, the steps below are open to you. If it is in liquidation, administration or has been dissolved, your position changes and recovery becomes much harder, so it is worth taking advice before spending more on it.
Put the debt in writing: invoice number, amount, the date it fell due, and a direct question about when it will be paid. As a business owed money by another business, you can also add statutory interest at 8% above the Bank of England base rate, a fixed sum of £40, £70 or £100, and your reasonable costs of recovery. Telling the company that is often enough on its own.
This is the formal warning before court. Between two businesses, the Practice Direction on Pre-Action Conduct expects you to give a reasonable period to respond, which it describes as 14 days in a straightforward case. The courts can penalise either side on costs if this step is skipped.
A statutory demand is a formal written demand for payment. If a company owes you £750 or more and does not pay or reach an agreement within 21 days of being served, gov.uk guidance says you can apply to wind it up.
Use it carefully: winding up ends the company, so it is a last resort, not a collection letter. A company can apply to challenge a demand, and you cannot usually make one for a debt that is more than six years old. It works best where the debt is clear and not in dispute.
You can claim money owed by a business through the County Court. Claims worth £10,000 or less normally go to the small claims track, which is designed for people without a solicitor. Use the company's registered name and number, not a trading name, or you may end up with a judgment you cannot enforce. Bear in mind that a judgment is a court order, not payment. If the company still does not pay, you have to ask the court to enforce it.
By this point, the debt has usually cost you more in time than you realise. Passing it to a collection agency changes the conversation. It stops being between two businesses with a relationship to protect and becomes a straightforward matter of settlement, with court still available as the next step if it is needed.
Companies change quickly. Directors leave, assets move and businesses that are struggling to pay one supplier are often struggling to pay others. The sooner you act, the more options you have, and the better your chances of being paid before anyone else.
Check the company is still trading, then chase in writing and add the statutory interest you are owed. If that fails, send a letter before action. After that the main routes are a collection agency, a County Court claim, or for undisputed debts of £750 or more, a statutory demand.
Gov.uk guidance says you can apply to wind up a company that owes you £750 or more if it has not paid or agreed to pay within 21 days of being served with a statutory demand. Winding up ends the company, so it is a last resort rather than a collection tool.
A formal written demand for payment of a debt. The company has 21 days to pay or reach an agreement. It can apply to challenge the demand, and you cannot usually make one for a debt that is more than six years old.
Yes. A court claim can be made against a person or a business. Claims worth £10,000 or less normally go to the small claims track. Make sure you name the correct legal entity, using the company number, not a trading name.
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