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Don’t Let Your Debtors Lock You Down!

Andrew Koffman

Reviewing and implementing your credit control procedures

COVID-19 and the resulting lockdown are having a huge impact on the cashflow of most businesses.  25% of UK businesses have temporarily closed down; 38% of businesses still in operation have reported substantially lower turnover; and 36% of firms have 3 months or less of cash reserves left.

Inevitably this pressure on businesses is set to continue but there is also an opportunity for SMEs to improve your cash position by good housekeeping.  The Government is encouraging a culture of forbearance between businesses at present but this should not require you to take an excessively lenient approach to recovering debts that are rightfully due.

The following guidance may be of use in these unusual times:

In-House Procedures: Ten tips

 Review your book of debtors

  1. Consider which debts you should prioritise.
  1. There is no need to be lenient unless non-payment is directly related to COVID-19.
  1. You are expected to act reasonably but so are your customers.
  1. As a general rule the earlier you tackle your debtor the greater the prospect of recovery.
  1. Consider the importance (if any) of preserving the relationship, both to you and to your debtor.

 Plan Ahead

  1. Develop a strategy for recovering each debt.
  1. Find out what you can about the financial position of the companies/individuals who owe you money.

Pre-Court Procedures

  1. Speak to your debtors during this crisis and be sure to keep notes from your conversations.
  1. Identify (with your lawyers’ help if need be) any legal issues, e.g. is the customer that you invoice the same one that opened the account, and have they accepted your terms of business?
  1. Consider (again with your lawyers) how long it will take to issue and serve any court proceedings including any “pre-action protocol” letters.


Speaking to Lawyers

If your in-house procedures are exhausted and payment remains outstanding, we can assist with the next steps and have a wealth of experience in recovering debts (contested or uncontested) on behalf of businesses of all sizes.


Bear in mind that some stubborn debtors may react only when faced with the reality of legal proceedings – often this comes with the receipt of a robust and pre-action protocol-compliant letter before action (LBA)

The terms of your contract (if any) ought to be considered and, where applicable, complied with as part of any recovery action. Similarly, early consideration of whether the debt is likely to be disputed is key, since this will determine the recovery routes open to you (including whether some form of insolvency procedure is available).

We can also assist with obtaining further information that might be required in relation to your debtor’s assets or status, and advising on the means of ensuring that demands are actually received in circumstances where many workplaces are currently closed.

Court proceedings

The present COVID-19 crisis has had and continues to have an impact on the way that you recover your debts and, in particular:

  • Courts are operating at a significantly reduced capacity, impacting on the time it is taking for claims to be issued and, in particular, the listing of hearings
  • Certain types of work categorised as non-urgent are not currently being processed and many existing hearings have been adjourned
  • The government has announced various measures designed to protect businesses from COVID-19-related financial problems

However, the courts are very much still ‘open for business’ and we are encouraging clients to avoid misplaced inertia when it comes to the pursuit of debts – the processing of claims and the enforcement of judgments, in many cases, can and should still be pursued with all efforts made to cut-out avoidable delays.

Enforcing a judgment

Similarly, whilst the current crisis is impacting on timescales for enforcement proceedings, the courts continue to process most types of enforcement work and, again, creditors should act early to avoid the inevitable post-lockdown ‘bottleneck’ when it comes to enforcement action (particularly in relation to High Court Enforcement Officer (HCEO) instructions – in-person visits to debtors are not taking place whilst the current restrictions remain in force).


The government has announced various measures, including changes to the insolvency regime, to help businesses avoid being pushed into insolvency as a result of the COVID-19 crisis. The situation continues to develop and certain measures might not be fully-clarified until new legislation can be passed, however you should bear in mind:

  • Restrictions are now in place to prevent commercial tenants being pursued for arrears of rent, including an effective ‘ban’ on the use of statutory demands (backdated to 1 March 2020) and on the issue of winding-up petitions (from 27 April 2020) – expected to be in place until 30 June 2020
  • Similar restrictions are expected to apply generally where a debtor’s inability to pay is a result of the COVID-19 crisis

However, again creditors must avoid simply assuming that their debts cannot currently be recovered – the protective measures are not intended to be ‘carte blanche’ for debtors to avoid payment and are intended to apply only where COVID-19 is legitimately the cause of difficulties and where the business is otherwise viable. Early assessment of how this applies to your and your debtors is crucial, and creditors should be prepared to act robustly to ensure that the new discretion afforded to the courts is applied only where legitimately engaged.

The situation continues to evolve but we are ready to assist where in-house attempts to recover debts have been exhausted.

Contact Us

We held a Zoom webinar event on Wednesday 29th April 2020 on Debt Collection and we will consider other events if you can confirm if you would be interested.  Please contact

Should you have any issues around debt collection at the moment please get in contact with Andrew

Andrew Koffman, Partner

t: 0161 827 4604