Trade Debt Recovery and Collection Suits: Common Questions

There is no fixed figure, because what decides it is the quality of your evidence and the other side's ability to pay. A six-figure balance with signed delivery notes usually resolves faster than a seven-figure one ordered over chat. We look at three things first: how complete the paperwork is, what assets the debtor visibly holds, and how long the balance has already aged.

Ordinary claims for goods sold or work done in trade generally run for two years, while some claims between two business parties run longer. The clock starts on the day the amount could first be demanded under the credit terms, not on the delivery date. A written acknowledgement of the debt restarts it, which is why we ask clients to keep one every time a customer asks to pay in instalments.

Chasing it yourself is fine and usually right, since most customers still want the trading relationship. Switch to a lawyer's letter once three approaches have produced no written reply, or as soon as the customer starts disputing the figure, because that letter will later be produced in court as evidence.

It depends how they closed. If dissolution is registered but liquidation is not yet completed, the company still exists and a claim can still be lodged. Once liquidation is registered as finished, what remains is a narrower route against the liquidator or directors in particular circumstances. We therefore check the entity's current status on the DBD register before anything else.

Yes. An ordinary sale of goods does not have to be in writing; what must be proved is that delivery happened and was accepted. Delivery notes bearing a recipient's signature, stamped billing slips and any part-payment carry real weight. A complete evidence set usually wins faster than a polished contract with no proof of delivery.

They count as electronic evidence, but you must be able to show who sent them and that nothing was altered. A bare screenshot is weaker than an exported full thread with the account identifier attached, and each thread should tie back to a purchase-order number in the accounting system.

The standard bundle is a current receivables ageing report, copies of every outstanding tax invoice and delivery note, the customer's subsidiary ledger, proof of any part-payments, and the reminders already sent. When those five agree with each other, the amount claimed stops being arguable and only the substance remains in dispute.

Reconcile before any formal letter goes out, because most gaps come from credit notes never posted, goods returned without paperwork, or penalties a salesperson waived verbally. Working line by line and then getting the customer to sign a balance confirmation is the single step that shortens a case the most.

Use a written acknowledgement of debt with a schedule stating the outstanding amount, each instalment, its date, and that missing one instalment makes the whole balance due. That form restarts the limitation period and can be sued on immediately after a default, unlike a chat agreement whose intent has to be proved from scratch.

The waived portion becomes a business loss, and you need evidence that the reduction had a commercial reason: negotiation minutes, an approval by whoever holds the authority, and the settlement document. Without that set, the Revenue Department may treat it as a gift and add it back as a non-deductible expense.

Several signals help before you commit: the latest financial statements filed with the DBD, the registration status, registered assets, and whether trading activity is still visible. If all of them point to an empty shell, court fees may not be worth committing and a write-off is often the better decision.

A settlement recorded in a judgment by consent can be enforced immediately on default, with no new lawsuit. A private agreement that fails sends you back to the beginning. That difference usually justifies the time spent getting as far as the court, especially with a debtor who has defaulted before.

Cases where the defendant does not fight, or does not appear, often conclude within a few months of filing. Where quality of goods or the amount itself is contested, examination of witnesses on both sides can stretch it past a year. The biggest accelerator is a complete document set on filing day, not repeated chasing afterwards.

They fall into four blocks: court fees scaled to the amount claimed, service of process and address tracing, professional fees, and enforcement costs if assets must be seized. We quote a range covering all four before starting, so it can be weighed against the realistic chance of collection.

The next stage is enforcement: trace assets, then seize or attach what is found — bank balances, amounts third parties owe the debtor, or registered property. This stage takes its own time and money, so the asset you intend to enforce against should be identified before you ever file.

As a rule the company's debt is the company's alone and directors are not personally liable, unless there is a personal guarantee, conduct amounting to fraud, or a specific statutory ground. That is why we suggest taking a guarantee at the moment credit is approved, not after the balance has already aged.

Ministerial regulations set a different procedure for each size band. Small balances need evidence of reasonable pursuit; mid-size balances need a suit that the court has accepted or an order issued; large balances must reach enforcement and show insufficient assets. Applying the wrong band to the wrong size is the most common reason the deduction is added back.

A registered operator writing off under the prescribed rules may deduct the related output VAT in the month of write-off, provided the reports and supporting evidence are complete. If any of it is later recovered, the VAT goes back in for the month of receipt. This step is frequently overlooked and the entitlement is lost for no reason.

An allowance is an accounting estimate reflecting risk in the financial statements; it is not yet a tax deduction. A write-off removes the balance from the receivables ledger and becomes deductible once the conditions are met. Many businesses carry an allowance for years believing the tax relief has already been taken — it has not.

Record it as income in the period received, reverse the output VAT if it was deducted at write-off, and file the receipt alongside the original write-off papers so the trail can be followed. Recovery is not a mistake in itself, but leaving it unrecorded turns it immediately into income missing from the system.