How to recover money owed to your business


If a person or organization owes you money and is late paying, there are several steps you can take to collect the money.

Speak to the person

The first thing to do is to contact the person. Some companies do this by mail or email, but often a phone call works better. In the call, you can discuss why the money has not been paid, and perhaps make an informal plan to have the debt repaid in installments.

A formal letter

If you still do not receive the money, a formal letter is required in which you state how much money is owed and what it was for, as well as setting out what steps you have already taken to recover the money.

You need to state when the late payment is required, which is usually seven days after the formal letter. You also need to detail the steps you will take if payment is still not received. This could include closing the account and taking legal action.

It can be a frustrating process, but in all phone calls and correspondence, it is important to be polite and not engage in arguments.


If you are not able to resolve the situation with the debtor, then you could use a mediation service that will help find a solution. If you do eventually go to court over the situation, the court will expect you to have attempted negotiation and mediation first.

Using a solicitor and the courts

If you cannot reach an agreement to receive the money, you could ask a solicitor to send a letter asking for payment and set out the legal process that will happen if payment is not received.

The last resort is court action. The risk of this is that if the debtor is insolvent, or an individual client is not working, they may be unable to pay the debt and little or no money will be received by your business. If the debtor goes bankrupt, you may only receive a small portion of the debt.

You can make a claim for amounts less than £3,000 online using the Small Claims Online service.


Recovering debts can be a time consuming process, but you can hand the reins to a financial outsourcing service. There are companies that will pay you for all your invoiced debts and then collect the money, though you will only receive a percentage of the money owed.