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I am often asked by clients, whether it is ‘commercial’ to pursue a debt. Businesses are looking to balance recovery of the debt with the worry that they may be throwing good money after bad.

My answer is that it depends on what is important to your business. What are you looking to achieve?

Some clients only want to pursue a debt if they can be as sure as is possible that they are going to recover the money i.e that the customer just needs that extra ‘incentive’ to pay up. For them ‘commercial’ is purely a financial decision.

I act for a number of clients who always pursue unpaid invoices, however, small. On a number of occasions this has involved issuing proceedings for sums under £500. For them it is a point of principle. Further as local businesses, they do not want to get a reputation for not pursing their invoices. For them, being ‘commercial’ is about protecting their reputation, avoiding others taking advantage and other paying customers getting disgruntled.

A commercial decision could also be driven by a need for security. Some clients know that their debtor cannot currently pay. However, by obtaining a Judgment against the debtor, they can look to enforce it straight away or at a later date (up to 6 years in most cases) by which time the debtor may be in a better position to pay. Interest can accrue on Judgments over £5000.

Equally, some clients don’t purse debts for commercial reasons.

They may know information about the customer to know there is no chance of any recovery. Some clients accept this, write the debt off (and claim back VAT/tax where relevant) and move on.

Clients often say they feel they have too good a relationship with a client to go to the extent of engaging a solicitor and certainly don’t want to look to issue court proceedings. My feeling is that there are only very limited situations where this can be justified. I believe you only have a good relationship with a customer if they pay you for the job you have done for them (provided they are of course satisfied with the job!)

As a solicitor, I can advise upon a course of action against a debtor, various enforcement methods and the costs. Generally, I can’t make commercial decisions for businesses. However, I act for a number of clients on a repeat basis acting as their external debt recovery body. I take the time to get to know what is ‘commercial’ for their business.   In turn when it comes to advising them about whether to pursue debts, I can tailor my advice to suit their commerciality.

If you would like someone to assist you with your debt recovery and provide straightforward, commercial advice relevant to your business then please do give me a call to discuss how I can assist you on 01905 723561 or e-mail

Added: 23 Mar 2016 12:42

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