What should I do before taking legal action to reclaim debts?

Your company’s credit control policy should include a plan for chasing payments as soon as they are classed as overdue, such as sending email reminders, then telephoning the customer, etcetera.

If these steps fail, you can escalate your payment request to senior people within the customer’s organisation (if it was a business-to-business transaction). For instance, you could formally notify the financial director, who may instruct that payment be made to you faster. Sometimes, a polite high-level approach (e.g. from your managing director to theirs) yields better results than dealing with company representatives.

If you wish to do business with this customer again in the future, maintain a professional and reasonable approach. A dispute such as this, when kept amicable, does not have to mean the end of your business relationship, even if it culminates in a legal case. You might want to emphasise that you have performed your end of the deal for which you are seeking payment, and that you wish to continue the mutually beneficial and friendly partnership you have enjoyed until now.

But remember: with each day that passes, your chances of recovering the money decreases. If you have tried several different routes of recovering the money to no avail, it may be time to contact a solicitor.

Don’t issue a claim unless you have followed the relevant pre-action protocol http://www.justice.gov.uk/courts/procedure-rules/civil/protocol and/or observed the Practice Direction for Pre-Action Conduct  http://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct