An invoice for £4,200 went out in March. It is now September. The customer answered the first two emails, then stopped. The phone goes to voicemail. A joiner you know says he used a debt collection agency and got nowhere. Your accountant says write it off. You want to take him to court.
You can. The question is whether the money at the end of it exists.
The letter before action is not a formality
Before issuing, you send a letter before action. If your debtor is an individual or a sole trader and you are a business, the Pre-Action Protocol for Debt Claims applies and the letter is prescribed: it must set out the debt, how it arose, any interest claimed, and it must come with an information sheet, a reply form and a financial statement form. The debtor then gets thirty days to respond. Skip it and the court can penalise you on costs even if you win.
Between two companies the protocol does not apply, but the general Practice Direction on pre-action conduct does, and a clear letter giving a reasonable deadline is expected.
Write it as though a judge will read it, because one might. Set out the contract, the work, the invoice number and date, the amount, the interest under the Late Payment of Commercial Debts (Interest) Act 1998 if you are claiming it, and a date by which you want payment. Attach the invoice and the acceptance. Send it by post and email.
A meaningful share of debts get paid at this stage, because the letter is the first moment the debtor understands you are not going to go away. The ones that do not get paid here are usually the ones where there is no money, and that is useful information before you spend any.
Issuing is the cheap part
Money Claim Online handles specified money claims up to £100,000 against defendants in England and Wales. You fill in the particulars, pay the issue fee and the claim is served. Claims up to £10,000 are normally allocated to the small claims track, which is designed to be usable without a solicitor and where you cannot recover legal costs beyond a small fixed amount even when you win.
The issue fee is a sliding scale that rises with the claim, reaching 5% of the value for larger claims, and there is a separate hearing fee once the claim is allocated. The whole scale was uprated in May 2024 and is reviewed periodically, so take the current figures from the EX50 leaflet rather than from anything you read last year. Court fees are recoverable from the defendant if you win, which is the one cost that does follow the judgment.
The defendant has fourteen days from service to respond, extendable to twenty-eight if they file an acknowledgement. If they do nothing, you request judgment in default and you have a County Court judgment within days. If they defend, you are into directions questionnaires, a mediation appointment through the Small Claims Mediation Service, and eventually a hearing at your local county court that will last an hour or two.
Keep the paperwork tidy from the start. Small claims hearings turn on documents, and the party with a clean bundle of quote, acceptance, delivery note, invoice and chaser emails usually wins against the party with a story.
Winning and being paid are two different events
Judgment is an order to pay. It is not money. If the defendant ignores it, enforcement is a second process with its own fees, and you choose the method based on what you know about them.
- A warrant of control sends County Court bailiffs to seize goods. For judgments over £600 that are not regulated consumer credit agreements, you can transfer up to the High Court and use a writ of control instead, which puts High Court Enforcement Officers on the doorstep and tends to produce faster results.
- An attachment of earnings order takes the money from a defendant's wages, which only works if they are employed rather than self-employed or a director paying themselves in dividends.
- A third party debt order freezes a bank account, if you know where they bank and there is something in it on the day.
- A charging order secures the debt against property they own. It rarely produces cash quickly, but it sits on the title and gets paid when they sell or remortgage.
You can also apply for an order to obtain information, which brings the debtor to court to answer questions about their assets under oath. It is slow, and it is sometimes the only way to find out which of the above is worth trying.
Each of these has a fee, and each fee is money you spend on a debtor who has already demonstrated that they do not pay.
The judgment that produces nothing
A County Court judgment is registered on the Register of Judgments, Orders and Fines. It stays there for six years, unless the debtor pays in full within one month of judgment, in which case it can be removed entirely. That timing detail matters more than it sounds: a debtor who cares about their credit file has a strong reason to pay quickly, and no reason at all once the month has passed.
Against a limited company, the calculation is harder. If the company has no assets, the judgment is against a shell. You can petition to wind it up for debts over £750, which costs a substantial deposit and generally recovers nothing for the petitioning creditor, but does end the company. Directors sometimes pay to avoid that. Sometimes they let it go and trade on through the company they set up last month.
So the real question, before the letter before action, is whether the defendant has anything. Check the company's filed accounts at Companies House. Look at whether they own their premises. Ask whether they are still trading and still being paid by other people. If the answer is that there is nothing, the money went when the work was done, and everything after that is throwing good money after it.
The commercial answer is often to sell the debt or write it off and fix the process that let it get to £4,200 unpaid in the first place: staged payments, a deposit, and a credit limit per customer that you actually enforce.
Where this shows up in the game
Business Baron treats debt recovery as a decision with a cost rather than a button. Chasing a customer takes your time, the letter before action costs you nothing but sometimes works, and litigation runs as a sequence of months with fees leaving the bank before anything comes back. Some defendants pay, some have nothing, and the difference is usually visible before you start if you looked. It is also the system that teaches most players to take a deposit.