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How and when should I chase my business debts during Covid-19?

View profile for Brian Kirby
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The coronavirus pandemic has inevitably had an impact on the cash flow of every business across the country, and has highlighted how important it is to have an efficient credit control process to ensure the survival of your business during times of economic hardship.  During the height of the pandemic, some leniency on unpaid debts was understandable, however there comes a time when your own cash flow must take priority and it is once more appropriate to pursue unpaid invoices.  Brian Kirby, Head of our Debt Recovery department, explains here how you can practically and sensitively chase those debts that are owed to you to secure your own cash flow.

How has Covid-19 impacted debt recovery?

During the initial stages of the pandemic, many businesses and sectors were faced with temporarily closing, moving their operations online or having to make cuts, relying heavily on the furlough scheme from the Government with those in the hospitality and retail sectors most affected.  Every business was required to batten down the hatches and protect their cash flow. Even as the restrictions are ending, the long term impact of the pandemic on the wider economy remains unclear.  It could therefore be considered reasonable in some cases that businesses pushed the limits with paying invoices, with creditors adopting a more tolerant approach.

The legacy of a pandemic of this nature can give rise to businesses using the restrictions as a reason for their continued non-payment, even if they have since re-opened and are operating as normal.  While some businesses will legitimately still be struggling to make payments, there are those whose financial situation does not restrict them from making overdue payments, and it will be up to your credit control team to ascertain which category your debtors fall into. 

What are the steps to recover my debt?

When you have unpaid invoices, you will be looking to reclaim the debt while maintaining the business relationship.  A “one size fits all” approach is not always the key to success, particularly during times of economic difficulty, so you will need to review each debt individually and make a strategic decision accordingly.  One of your debtors may have continued trading during the pandemic while another may still be closed with employees on furlough leave and so having an open discussion with each debtor will allow you to make the most appropriate decision.

Depending on your history with the debtor, the amount of the debt and your terms and conditions, it may be prudent to attempt to negotiate an alternative payment arrangement, for example paying in instalments or deferring the payment.  Essentially, communication is key with any commercial contact you have.  Striking the balance between being understanding and being demanding can make all the difference when it comes to collecting the debt owed to you and only through communication with them will you know how to set the tone. 

Adopting this approach will only go so far and you may find that your debtors take advantage of your flexibility.  In this situation, it is important not to delay matters and take action.  While the debt recovery process can be complex, much will depend on the response or otherwise of your debtor but generally there are four main steps involved:

  1. Sending a Letter Before Action (LBA) – this letter acts as a formal notice to the debtor that there is a debt outstanding and sets a deadline for when this should be paid.  In the majority of situations, an official letter of this nature from a reputable legal firm will encourage the debtor to make the payment and avoid legal action being taken.
  2. If the debt remains unpaid after the deadline then it is open to the creditor to issue Court proceedings in order to recover the debt.
  3. A County Court Judgment (CCJ) can be applied for in the event of the debtor admitting the debt or simply ignoring the Court process.
  4. The creditor can take steps to recover the debt through a variety of enforcement measures.

How can I avoid unpaid debts in the future?

Every business will face unpaid invoices but having preventative procedures in place can help you minimise the risk to your cash flow.  Having a robust credit control process within your business that works in conjunction with your business continuity plan is a good place to start; without these you will be vulnerable if required to react in times of economic difficulty. 

There are a number of ways that we can assist you in not only recovering unpaid debts, but in working towards a more efficient credit control process:

  • We have access to unique software that can investigate and monitor credit scores of your debtors, allowing us to take the most appropriate course of action to reclaim your debt.
  • By using this software in line with our Case Management System, we will work with you to streamline your in-house processes leading to less unpaid debts in the future, tailoring the process to your own business goals, objectives and strategy.
  • Should you require us to assist with your debt recovery, our fixed price model removes the financial risk from you as we are confident we will be successful in claiming what is owed to you along with late payment compensation which covers our fees.

Brian concludes, “Over the past 12 months, we have had considerable sympathy for those debtors who have not been able to pay their invoices and in genuine cases of hardship we have endeavoured to find workable solutions as an alternative to Court action. However, when clients are facing potential closure due to non payment of debts where they have provided goods and/or services, they have every right to take robust and swift action to protect their business. In short, if unpaid debts are having an impact on your cash flow and your own survival then, despite these more complex times, it is imperative that you continue to manage cash flow and avoid exposure to damaging debt.”

To discuss any debts owed to you with Brian or to find out more about how we can work with your credit control systems, contact us today on 023 8071 7421 or email   


This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.