Credit Control & Debt Collection

Debt Collection of up to £100,000 for businesses

All costs information given here is general and we will give more personalised information later when a full quote is requested.

Debt Collection of up to £100,000 for businesses

Business Debtor

We receive an instruction from a business client to recover a debt owed by another business.

The debt is uncontested or there is no material basis for disputing the debt.

The client decides against using any insolvency related process.

We write a letter before claim.  We will need the contract or terms of business with details of rates of interest and the order, order acceptance and invoice as available.  We always need to be able to show the money has fallen due.

Under the Late Payment of Commercial Debts (Interest) Act 1998 in the absence of a specified rate, interest can be claimed at 8% over the Bank of England base rate together with compensation at the rate of £40 – £100 per invoice outstanding.

Compensation (or debt recovery cost) is chargeable as follows:

Amount of debt What you can charge
Up to £999.99 £40
£1,000 to £9,999.99 £70
£10,000 or more £100

Scenario 1

We take instructions.  A letter before claim is sent and payment is made.

The costs we claim are those which can be charged for each invoice under the Late Payment of Commercial Debts (Interest) Act 1998.  VAT is added to those charges so the range would be £40 plus VAT to £100 plus VAT for each invoice.  We cannot add VAT to the Compensation charge shown above.

A case like this would normally take no more than one month from initial instruction to resolve.

Scenario 2

As above but there is no offer or payment.  Proceedings have to be issued.  The Defendant fails to file an acknowledgment or a Defence.  A judgment in default is entered.

There are three tracks in the Court: small claims (for claims of up to £10,000), fast track (for claims up to £25,000) and multi-track (for claims exceeding £25,000).

A Court fee is payable on issue.  There is a table of fees which are currently as follows:

The court fee is based on the amount you’re claiming, plus interest.

Claim amount Paper form fee Online claim fee
Up to £300 £35 £25
£300.01 to £500 £50 £35
£500.01 to £1,000 £70 £60
£1,000.01 to £1,500 £80 £70
£1,500.01 to £3,000 £115 £105
£3,000.01 to £5,000 £205 £185
£5,000.01 to £10,000 £455 £410
£10,000.01 to £100,000 5% of the claim 4.5% of the claim

Our fee to get to the point of a default judgment additional to scenario 1 would normally be £600 to £900 plus VAT depending on the number of invoices.

The steps set out above would normally take up to 3 months from the date of initial instruction.

Scenario 3

A Defence is filed but is has no real merit.  Subject to the claim not being in the small claims track, an application may be made for the Defence to be struck out and/or for summary judgment.  The costs of this application including representation by Counsel at a hearing would normally be £1,500 to £2,000 plus VAT and a Court fee of £255.

The costs may be more if the Defence is not clear or a large number of issues which are irrelevant have been pleaded.

A case like this would normally take about 6 months to conclude from initial instruction.

Scenario 4

In a small claims matter, the case proceeds to a hearing.  Witness statements have to be prepared and reviewed.  Documents on which the parties intend to rely have to be disclosed.  The pre-trail work normally involves costs of £1,000 to £1,500 plus VAT.  Attendance at a hearing on a small claims matter would involve costs of £500 to £750 plus VAT normally.  A court hearing fee is payable before the final hearing.  In the Small Claims Court there is a range of up to £335 where a claim is worth more than £3,000.

Cases of this nature normally take about 9 months to conclude from initial instruction.

Scenario 5

A larger case proceeds to a full trial.  The costs will be extensive.  In practice even in what appears to be straightforward litigation it is rare for the overall costs to be less than £25,000 inclusive of VAT and disbursements where there is a substantive dispute.

Mediation may be appropriate.

The Court hearing fee is £545 in fast track cases and £1,090 in multi-track cases.

We will need to provide a detailed quotation.

A case like this can take one to two years to litigate from the receipt of instructions.

People dealing

  • Paul Cowdery is a Partner and his hourly rate is £300 plus VAT.  Paul is an experienced litigator and has undertaken contract and debt recovery work for many years as part of a mixed commercial litigation practice.  He spends about 5% of his time on debt related matters.
  • Irfan Dad is his assistant and his rate is £118 plus VAT.  Irfan has been doing employment work since 2017 working with Paul.  About 10% of his time is spent debt related matters.
  • Our fees are based on the hourly rates of the people dealing.  The ranges given above take this into account as well as the complexity of the matter.

Recoverable costs

In the small claims court legal costs save for the costs of issue and the hearing fee are not normally recoverable by the successful party.

On the fast track, legal costs are recoverable by the successful party and normally amount to about 75% of the costs incurred.  There are scenarios in which this can be varied.

On the multi-track, the proportion of costs recoverable is about the same as the fast track.  There is also potentially a process for costs budgeting.

Enforcement

The costs of enforcement would be additional.

Recoverability

All of this is subject to the debtor having the money!

Important

The information set out above is a guide only.

Please note that in all cases where we are asked to undertake work, we will give a more precise and personalised indication of costs in our retainer letter sent to you at the outset of the matter.