Debt collection toolkit
- Step-by-step guidance on chasing debts
- Clear and easy to follow
- Covers statutory demands
This debt collection toolkit contains the documents and guidance you need to strengthen your business's approach to debt collection.
It is important to have a clear and consistent process to get payments in. This toolkit will help you to remind and encourage late payers to deal with your bill, and gradually increase the pressure on them if appropriate.
The essential documents in this toolkit include:
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a practical how-to guide to lead you through your debt collection options;
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template invoices;
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three chasing letters to escalate matters a step at a time; and
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detailed guides to help you fill in the right statutory demand form properly.
Maximise your chances of recovering overdue payments and keep your cash flow running smoothly.
Q&A
When should I use this toolkit?
Use this debt collection toolkit any time your business has overdue payments. It is better not to wait for them to become a problem, but to have a consistent approach for late payers that kicks in shortly after the deadline for payment.
You can use it for any amount of money owed, although some of the options are not suitable for very small sums. Statutory demands, for example, are for debts of £750 or more (if it is a company that owes you the money), or £5,000 or more (if it is an individual or sole trader who owes you).
What does this toolkit cover?
This toolkit for chasing payments and collecting debts includes a straightforward how-to guide which gives you a broad process to follow for debt collection and outlines the choices that you can make when thinking about taking enforcement action.
The steps include:
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properly invoicing for what is owed to make sure it is clear;
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writing chasing letters that gradually increase the pressure; and
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if payment is still not prompted, escalating the matter, for example by serving a statutory demand for the debt.
The toolkit includes the essential documents for each step of the journey.
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Why do I need this toolkit?
One of the keys to protecting your cash flow is having a proper debt collection process. Being aware of your options to take more serious action before things become problematic is important, leaving you free to take action promptly if an issue does arise.
Ultimately, it is a commercial decision for you as to exactly how far you go in pursuing overdue payments. This toolkit will help you act if that is what you decide.
Where can I find out more?
You can find full guidance on debt collection in our detailed Q&A on Chasing payments and enforcement.
If you choose to take things further than the debt collection steps outlined in this toolkit, you could consider bringing a small claim against a stubborn debtor. See Small claims toolkit for help if that is the direction you wish to take.
Documents in Toolkit
Debt collection timeline- Final letter chasing payment
- First letter chasing payment
- How to guide: Debt collection toolkit
- Non-VAT invoice
- Second letter chasing payment
- Step-by-step guide to form SD1
- Step-by-step guide to form SD2
- Step-by-step guide to form SD3
- VAT invoice
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