Your business has chased the invoice, sent reminders and issued a formal Letter Before Action.
The deadline has passed and the money still has not arrived. What happens next?
Vishal Mahay is a Solicitor, Partner and Head of Business Services at NBB Waldrons. He advises businesses on commercial disputes and litigation, helping clients assess not only the legal merits of a claim but also the commercial reality of pursuing it.
Once a Letter Before Action has been sent, the next step should not automatically be “issue proceedings”.
The debtor’s response, the evidence, the value of the claim and, importantly, whether the debtor can actually pay all need to be considered.
What can happen after a Letter Before Action?
There are several common outcomes. The debtor may:
- Pay in full
- ask for additional time
- propose instalments
- negotiate a reduced settlement
- dispute the debt
- request documents
- ignore the letter completely.
Each outcome requires a different strategy.
What if the debtor offers to pay?
Where a debtor accepts liability but cannot pay immediately, a payment arrangement may provide a quicker and less expensive route to recovery than litigation. Any arrangement should be documented clearly. It should ideally address:
- The total amount owed
- payment dates
- instalment amounts
- interest, where applicable
- what happens if payments are missed.
A sensible settlement that actually results in payment may sometimes be commercially preferable to obtaining a judgment that later proves difficult to enforce.
What if the debt is disputed?
A substantive dispute should be assessed before proceedings are issued. The debtor may raise arguments relating to:
- The contract
- quality of goods or services
- performance
- pricing
- set-off or counterclaims
- whether payment is due at all.
At that stage, the matter may have moved beyond straightforward debt collection and become a wider commercial dispute.
Our Commercial Litigation team can advise where liability becomes contested.
Parties should also consider whether negotiation or mediation could resolve the dispute.
Government guidance on options if you’re owed money identifies mediation, court proceedings and, in appropriate cases, statutory demands among the potential routes available.
What if the Letter Before Action is ignored?
Where the relevant pre-action requirements have been followed and the debtor does not pay or respond, court proceedings may be considered.
For many straightforward debts, this may involve issuing a County Court money claim. The claim may seek:
- the principal debt
- applicable interest
- court fees
- recoverable legal costs, subject to the relevant rules.
However, proceedings should still be approached as a commercial decision. Before issuing, consider:
- How strong is the evidence?
- Is the debt genuinely disputed?
- Does the debtor have assets?
- Is the debtor solvent?
- What will proceedings cost?
- How long could recovery take?
- Is there a realistic enforcement route?
Late payment is under increasing scrutiny
Businesses are operating against a changing late-payment landscape.
In May 2026, the Government introduced the Small Business Protections Bill, proposing stronger powers to tackle persistent late payment and tougher rules for larger businesses paying smaller suppliers. The scale of the challenge remains significant.
Recent BCIS analysis found that large construction businesses paid approximately one in seven invoices late in 2025.
Meanwhile, UK Debt Collection News continues to report on business CCJs, insolvency trends and late-payment issues across the UK.
For businesses, the practical message is simple: unpaid debts should be actively managed rather than allowed to drift indefinitely.
What happens after court proceedings are issued?
Once a court claim is served, the defendant has an opportunity to respond. They may:
- pay
- admit the claim
- make a payment proposal
- defend part of the claim
- defend the claim in full.
If the defendant fails to respond within the relevant timeframe, the claimant may potentially apply for judgment in default.
Where a claim is defended, the court will normally give directions governing how the case proceeds.
Depending on its value and complexity, this can involve disclosure, witness statements, expert evidence where appropriate, mediation and ultimately a hearing or trial.
Does a County Court Judgment guarantee payment?
No. This is one of the most important realities of debt recovery.
A judgment confirms that the debtor is legally required to pay, but it does not automatically put money into the creditor’s bank account.
Where payment is still not made, enforcement may be necessary.
How can a judgment be enforced?
The appropriate enforcement method depends on the debtor’s circumstances. Possible options include:
Warrant or writ of control
Enforcement agents may seek payment and, where legally permitted, take control of goods.
Third-party debt order
This may allow money held by a third party, such as funds held in a bank account, to be frozen and potentially paid towards the judgment debt.
Charging order
A debt may potentially be secured against land or other qualifying assets owned by the debtor.
Attachment of earnings
Where the debtor is an employed individual, deductions from earnings may be possible in appropriate cases.
The best enforcement method depends on what assets or income actually exist.
What if the debtor appears insolvent?
Insolvency considerations may become relevant where a debtor genuinely cannot pay.
The Insolvency Service provides official guidance on bankruptcy, company insolvency and creditor remedies.
A statutory demand can sometimes be used as part of an insolvency process.
Current Government guidance confirms that a debtor generally has 21 days to pay or reach an agreement following a statutory demand.
Subject to the relevant requirements, bankruptcy proceedings may potentially be considered where an individual owes at least £5,000, while a company may potentially face winding-up proceedings where debts meet the relevant statutory threshold.
However, insolvency procedures should not be used simply as an alternative form of pressure where a debt is genuinely disputed.
The costs can also be significant and recovery is not guaranteed. Government guidance specifically warns that insolvency action can be expensive and creditors may still recover little or nothing. See the Government’s business debt and continuity options for further official guidance.
Should you pursue every debt through court?
No. A strong legal claim is not automatically a good commercial claim.
If the debtor has no assets and no realistic ability to pay, obtaining judgment may add further cost without producing a meaningful recovery.
Likewise, where a long-standing customer is experiencing a temporary problem, a structured settlement may sometimes protect both recovery and the commercial relationship.
The increasingly modern approach to debt recovery is therefore not simply about escalating as quickly as possible. As highlighted in a recent Real Business feature on commercial debt recovery, communication, proportionality and preserving viable relationships can sometimes sit alongside firm recovery action.
The objective should always be the same: achieve the best practical outcome.
Vishal’s view:“A Letter Before Action is often the point at which a business needs to step back and make a genuinely commercial decision.
“Court proceedings can be effective, but obtaining judgment is only one part of debt recovery. Before committing more time and cost, we look at the strength of the claim, what the debtor is saying, their financial position and whether there is a realistic route to actually recovering the money.
“The best outcome is not always the most aggressive one. It is the route that gives the business the strongest realistic prospect of getting paid.”
How NBB Waldrons can help
Our Debt Collection and Recovery team can assist at every stage of the recovery process, from Letters Before Action and settlement negotiations through to court proceedings and enforcement.
Where the debt is disputed, our wider Commercial Litigation team can advise on the merits, risks and strategy.
For an overview of the earlier stages of recovery, read Are You Owed Money? How to Recover Unpaid Debts Legally and Effectively.
NBB Waldrons supports businesses throughout England and Wales from offices in Birmingham, Cheltenham, Dudley, Kingswinford, London, Merry Hill, Walsall and Worcester.
If you have already sent a Letter Before Action without success, contact our team to discuss the most commercially appropriate next step.
