📖 Longer guide — approx. 10 min read
For most commercial debts under £150,000, court and solicitors are not the most practical route to getting paid. They are the most familiar route — but familiar and practical are not the same thing.
Court proceedings take 9 to 18 months at the small claims level and up to five years or more for larger disputes. Solicitor costs represent a significant proportion of what is being recovered, and a large part of those costs are irrecoverable even if you win. The process is public, adversarial, and slow — and it is frequently the worst outcome for both sides.
There is a better route for the vast majority of commercial invoice disputes. This page explains what it is, how it works, and when it makes sense.
The instinct to go to court when an invoice goes unpaid is understandable. It feels like the serious, legitimate response. But for most commercial debts the economics of court are deeply unfavourable — and the alternatives are significantly better.
The financial limit is £10,000 for small claims. For commercial invoices above that threshold, the matter moves to the fast or multi-track, where solicitor involvement becomes almost unavoidable and costs escalate sharply.
Court fees are just the starting point. For a £50,000 claim, the court issue fee alone is £2,500. Add the likely hearing fee of £1,401 and the total court fees reach £3,901 — before a solicitor has been instructed. Our court costs comparison sets out the full picture across every claim size.
A large proportion of costs are irrecoverable even if you win. Even a successful claimant recovers only a portion of their legal costs. The rest comes out of the recovered amount.
The timeline destroys cash flow. A small claims hearing takes 9 to 18 months. A fully litigated dispute takes 12 months to five years or more. During that period the debt remains unresolved and the cash flow impact continues.
Court is bad for both sides. The party on the receiving end faces their own solicitor costs, the risk of an adverse costs order if they lose, and irrecoverable fees even if they win. For commercial debts under £150,000 — the sub-legal band — court proceedings are frequently the worst outcome for both parties. That shared interest in avoiding court is exactly why alternatives work.
A private neutral decision process is not mediation. It does not require both sides to agree on a settlement. It is a binding determination by an independent expert — and it works differently from anything most businesses have encountered.
Both parties agree to appoint an independent neutral: a legally trained professional with substantial commercial experience. The neutral reviews the contract, the relevant documents, and the written submissions from both sides. There is no hearing. Neither party needs to attend anywhere. Neither party needs a solicitor. The neutral issues a binding decision based on the documents and submissions alone.
Once the matter is ready — both parties have submitted their documents and written case — the binding decision is issued within 10 business days. Against 9 to 18 months for small claims and up to five years for litigation, the difference is not incremental. It is a fundamentally different proposition.
Mediation is often suggested as the alternative to court. For some disputes it is the right choice. But for unpaid invoice recovery it has a significant limitation: mediation requires both parties to agree on a settlement. If they cannot — or will not — the dispute is unresolved and you are back to where you started.
A binding neutral decision process does not have that limitation. Both parties agree in advance to be bound by the neutral's decision. Whatever the neutral determines is owed — that is the outcome. There is no risk of the process ending without a resolution. This distinction matters particularly when a final demand has been ignored or a debtor is being deliberately difficult.
First: send a formal letter before action. This puts the debtor on formal notice that you intend to take further action within a defined period, typically 7 to 14 days. Include statutory interest at 8% above the Bank of England base rate, and fixed compensation of £40, £70, or £100 depending on the debt size.
Second: assess the response. If they pay, the matter is resolved. If they dispute the invoice, you now have a formal record of their position. If they ignore the letter before action, you have a clear record of their non-engagement — which matters in any subsequent process.
Third: propose a neutral decision process. Contact the other side formally and propose Dispute Neutral as the next step. Set out clearly that this is a private, fixed-fee, binding process — and that the alternative is a court claim that carries its own costs risks for both sides.
Fourth: if they agree, start a matter. Both parties register, submit their documents and written case, and the neutral issues a binding decision within 10 business days.
Fifth: if they refuse ADR, document it. Since October 2024, courts must consider whether a party unreasonably failed to engage in ADR when assessing costs. A debtor who refuses a proportionate, fixed-fee binding process for a commercial debt under £150,000 will find that refusal difficult to justify.
The most effective time to agree on a dispute resolution process is before an invoice goes unpaid. Businesses that include a Dispute Neutral clause in their standard terms of business or client contracts ensure that if an invoice dispute does arise, the resolution route is already agreed — before the relationship breaks down.
Draft clauses suitable for incorporation into your terms of business, client engagement letters, or standard contracts are available in the Include us section of the site.
| Dispute Neutral | Small claims court | Solicitor-led litigation | |
|---|---|---|---|
| Suitable for debts up to | £150,000 | £10,000 | No limit |
| Decision time | 10 business days | 9–18 months | 12 months – 5+ years |
| Cost | Fixed fee from £600 + VAT | Court fees + time | Significant legal costs |
| Privacy | Fully private | Public record | Public record |
| Solicitor needed | No | No | Usually yes |
| Hearing required | No | Yes | Yes |
| Binding outcome | Yes | Yes | Yes |
| Risk of adverse costs | None | Low | High |
| Works for disputed invoices | Yes | Poorly | Yes, but slowly |
Yes. A private neutral decision process produces a binding determination that both parties agree in advance to honour — as a matter of contract. If the losing party does not comply, enforcement through the courts is a further step available to the winning party, in the same way that a court judgment requires separate enforcement action. In practice, most parties comply without the need for enforcement.
Both parties need to agree to use the process. If the other side refuses without good reason, that refusal carries real costs risk in any subsequent court proceedings — since October 2024, courts must consider unreasonable refusal to engage in ADR when assessing costs. Document every proposal you make. A party that refuses a proportionate, fixed-fee binding process for a commercial debt under £150,000 will find that position difficult to justify.
Yes — and for disputed invoices it is often the most appropriate route. The neutral reviews both sides' documents and submissions and makes a commercial assessment of what was agreed, what was delivered, and what is properly owed. Court — particularly the small claims track — is a poor forum for nuanced commercial disputes involving professional judgement, quality questions, or contract interpretation.
Dispute Neutral charges a fixed fee regardless of the size of the debt within the £1,000 to £150,000 range — starting from £600 plus VAT. Court fees for a £50,000 claim alone are £3,901 before any legal costs. For a £150,000 claim, court fees reach £8,901 before solicitors are involved. See our full cost comparison for the complete breakdown.
If you have an unpaid invoice under £150,000 and want a faster, more proportionate route to a binding outcome, Dispute Neutral is built for exactly this situation.
Want to make sure your contracts already include an agreed resolution process? Draft clauses are available in the Include us section.
Start a matter →Private • Fixed-fee • Binding decision in 10 business days