Most bad debts were recoverable at some point. What usually changes is not the law but the file: records get lost, people move on and the debtor's position weakens. This sequence keeps your claim strong from the first missed payment.
1. Check your file before you chase
Before contacting the debtor, confirm what you can prove: the agreement (signed contract, purchase order or accepted quotation), what you delivered and when, the invoices issued, and any acknowledgement of the debt. Gaps are easier to fill now than after a dispute starts.
2. Reconcile the statement of account
Send a clear statement of account showing invoices, payments and the balance. Ask the debtor to confirm it. A confirmed statement is one of the strongest documents you can hold.
3. Send a formal demand
If payment does not follow, a formal demand sets out the debt, its basis, the documents that prove it and a firm deadline. It should be accurate and professional — overstated amounts or threats weaken your position. Many debts are paid or settled at this stage.
4. Negotiate — and document the result
If the debtor proposes to pay over time, agree a written payment plan with dates and amounts, a clear acknowledgement of the total debt, and what happens on default. Take security such as dated cheques or a guarantee where possible.
5. Escalate on time
If the debtor will not pay or breaks the plan, escalate before time and evidence run out. Depending on the documents, routes can include a payment order, a claim, or arbitration under the contract — handled by licensed advocates. A well-organised file means the advocate can act quickly.
Prevention: the cheapest recovery
- Clear payment terms and milestones in every contract
- Invoices issued promptly with supporting documents
- Credit limits and security for larger customers
- A fixed internal routine for following up overdue accounts