When another business owes you money and won't pay, the impact can be immediate and serious. Cash flow suffers, time gets eaten up chasing what you're owed, and the relationship with the other party deteriorates fast.
Commercial debt recovery is the process of getting that money back. There are several routes available to UK businesses — and the right one depends on the size of the debt, whether it is disputed, and how quickly you need a resolution.
A commercial debt is money owed between businesses as a result of a contract or trading relationship. It includes:
Commercial debts are different from consumer debts. The rules, the rights, and the recovery options are different too — and in many cases more straightforward.
Before taking any further step, you should send a formal letter before action (LBA). This puts the debtor on notice that you intend to pursue the debt and gives them a short window — usually 7 to 14 days — to pay or respond.
An LBA is not the same as a final demand. It is a legal step that courts expect to see before a claim is issued. It also sometimes prompts payment on its own, without any further action needed.
Under the Late Payment of Commercial Debts (Interest) Act 1998, you are entitled to claim statutory interest on overdue commercial invoices at 8% above the Bank of England base rate. You can also add fixed compensation of £40, £70, or £100 depending on the size of the debt.
These rights apply automatically to most business-to-business transactions unless your contract specifies otherwise. Many businesses do not realise they can add these amounts to what they are chasing.
If the debt is disputed — meaning the other side is not simply ignoring you but is actively contesting the invoice or the contract — a private neutral decision service offers a practical route to a binding outcome.
Both parties appoint an independent neutral, a legally trained professional, who reviews the contract, the documents, and the written submissions from both sides. The neutral then issues a binding decision, without a hearing, without solicitors on either side, and within a fixed timeframe.
At Dispute Neutral, that decision is issued within 10 business days of the matter being ready. Fees are fixed, the process is private, and the outcome is binding. It is designed for commercial debts under £150,000 — including unpaid invoices, trade debts, professional fees, and school fees — in England, Wales, and Northern Ireland.
For debts that are straightforward and undisputed, a court claim is an option. Debts under £10,000 typically go through the small claims track, which is relatively accessible for businesses without legal representation.
For larger amounts the process becomes more complex, more expensive, and slower. Court proceedings for commercial debts above £10,000 can take many months and carry significant costs risks. Even a successful judgment does not guarantee payment — enforcement is a separate step.
Debt collection agencies work on a commission basis, taking a percentage of whatever they recover. They can be effective for chasing straightforward unpaid invoices, but they have no power to resolve a genuine dispute, and their fee reduces your net recovery.
The answer depends on two questions: is the debt disputed, and how much is it worth?
For a straightforward unpaid invoice where the other side is simply not paying, a letter before action followed by a court claim or collection agency may be the most direct route.
For a disputed debt — where the other side is contesting the invoice, the work, or the contract terms — a private neutral decision service is usually more appropriate. Court proceedings for disputed debts are slow and expensive. A neutral decision process resolves the disagreement directly and produces a binding outcome far faster.
For debts under £150,000 where speed, cost, and certainty matter, Dispute Neutral is built specifically for this situation.
Commercial debt recovery involves debts between businesses, typically arising from contracts, invoices, and trading relationships. Consumer debt recovery involves debts owed by individuals. The legal framework, the recovery options, and the costs involved are different. Commercial creditors generally have stronger rights, including automatic entitlement to statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998.
It depends on the route. A letter before action sometimes prompts payment within days. A court claim for a disputed debt can take six to twelve months or longer. A private neutral decision process at Dispute Neutral produces a binding decision within 10 business days of the matter being ready — significantly faster than any court route.
Not necessarily. For smaller, straightforward debts many businesses handle the process themselves. For disputed debts, a private neutral decision service like Dispute Neutral does not require either party to instruct a solicitor. The process is document-based and designed to be accessible without legal representation.
Yes, in many cases. Under the Late Payment of Commercial Debts (Interest) Act 1998 you can claim fixed compensation of £40 for debts under £1,000, £70 for debts between £1,000 and £9,999, and £100 for debts of £10,000 or more. You may also be able to claim reasonable recovery costs beyond those fixed sums if your actual costs were higher.
If you have a commercial debt under £150,000 and want a faster, simpler, binding route to resolution, Dispute Neutral may be the right place to start.
Start a matter →Private • Fixed-fee • Binding decision in 10 business days