Atlas Claims InsightsPublished 27 October 2026 · 8 min readKey takeaways
- Most recovery problems start before the sale: unclear terms, no credit check and no agreed payment date.
- Your terms and conditions help only if they are actually part of the contract, so get them accepted before the first order.
- Retention of title, interest, governing law, jurisdiction and dispute clauses make recovery faster and cheaper.
- A firm, documented collection timetable from the first missed due date is the single most effective habit.
Every unpaid invoice that reaches a recovery firm has a history. Often the customer was never credit checked, the terms were never agreed, or the account was allowed to drift for months before anyone escalated it. None of that makes recovery impossible, but each gap makes it slower, more expensive and more uncertain. The good news is that most of the gaps are easy to close.
Know your customer
- Identify the legal entity: record the customer’s full registered name, company number and registered address. Trading names and group names are not enough, and invoicing the wrong entity is a common problem in recovery.
- Check credit: review filed accounts, credit reports, county court judgments and payment behaviour before offering credit, and again periodically.
- Set a credit limit appropriate to the risk, and stick to it. Increase it deliberately, not by default.
- Get the right contacts: know who approves invoices and who pays them.
Make your terms actually apply
Standard terms protect you only if they form part of the contract. In business-to-business dealings, the common problems are:
- Terms sent too late, for example printed on the back of an invoice after the goods have been delivered.
- The battle of the forms: both sides exchange their own terms, and the last set sent before the contract is concluded may prevail.
- Onerous terms not highlighted: unusual or onerous clauses may not be enforceable unless fairly brought to the customer’s attention.
The safest approach is a signed credit application or account agreement that incorporates your terms, with the terms referred to again on quotations, order acknowledgements and invoices.
The clauses that matter most in recovery
| Clause | Why it helps |
|---|---|
| Payment terms | A clear due date, for example 30 days from the invoice date, removes arguments about when payment was due. |
| Interest and costs | A contractual interest rate, or reliance on the Late Payment of Commercial Debts (Interest) Act 1998, gives the customer a reason to pay on time. Any contractual rate must be a substantial remedy. Reforms before Parliament in 2026 would make statutory interest mandatory and cap most payment terms at 60 days, so check the current position. |
| Retention of title | Keeps ownership of goods until payment, which can matter if the customer becomes insolvent. |
| Disputes procedure | Requires complaints about goods or invoices within a short period, limiting late “disputes” raised to avoid payment. |
| No set-off | Prevents the customer withholding payment against unrelated claims, subject to reasonableness rules. |
| Governing law and jurisdiction | Essential for foreign customers: decides which law applies and where you can sue or arbitrate. |
| Suspension | Allows you to stop supplying if the account is overdue, subject to the insolvency rules on continued supply. |
Our late payment interest calculator shows what statutory interest and compensation can add to an overdue UK invoice.
Security for larger or riskier accounts
- Personal or parent company guarantees from directors or group companies.
- Deposits, stage payments or payment in advance for new customers or large orders.
- Credit insurance, which also gives you a second opinion on the customer’s credit.
- For exports: confirmed letters of credit, documentary collections, standby letters of credit or bank guarantees, each with different levels of protection.
A firm collection timetable
The older a debt gets, the harder it is to collect. A simple, consistently applied timetable is often more effective than any single legal step:
- Before the due date: check the invoice has been received and approved.
- Day 1 overdue: a polite reminder, by email and phone.
- Day 7 to 14: a firmer reminder, and a hold on further credit if appropriate.
- Day 30: a final demand, stating the interest and compensation that will be claimed.
- Day 45 to 60: escalation, either to a recovery firm or by a formal letter before action.
Record every contact and every reason given for non-payment. A documented history makes later negotiation and, if necessary, proceedings much easier. See our guide to letters before action.
Handle disputes early
Many debts become uncollectable because a minor complaint about quality, quantity or pricing was left unresolved and grew into a reason to withhold the whole invoice. Deal with complaints immediately, separate the undisputed part of the invoice and ask for it to be paid, and confirm any agreed credit notes in writing. If a dispute cannot be resolved, a negotiated settlement, documented properly, is usually better than months of silence.
Quick answers
How can a business reduce bad debt?
Check and limit credit, make sure its terms are part of every contract, take security where the risk justifies it, and follow a firm collection timetable from the first missed due date.
Are terms printed on an invoice binding?
Often not, if the invoice is sent after the contract was made. Terms should be agreed before the first order, ideally through a signed account application.
Can I charge interest on late B2B payments?
Yes. In the UK, the Late Payment of Commercial Debts (Interest) Act 1998 allows statutory interest and fixed compensation unless the contract provides a substantial alternative remedy.
When should I pass a debt to a recovery firm?
Usually once a final demand has been ignored, often around 45 to 60 days overdue, and before the customer’s position deteriorates further.
Need help with a specific matter? Send us the documents for a free, confidential review, or message us on WhatsApp at any hour on +44 7429 535705. Start a case review.
This guide is general information about the law of England and Wales as at October 2026. It is not legal advice and may not cover your situation. Atlas Claims is not a law firm; for advice on your legal rights or on litigation, consult a qualified solicitor.
