Business debt - money owed by customer

As a business you rely on prompt payment of the money you are owed by customers. Where a customer is late in paying this can cause your business cashflow problems.

As part of our commitment to serving you better, we highly recommend utilising the resources available at the Money Advice Service website. Their comprehensive guides and information cover various aspects of financial and legal matters, including small claims advice and may be able to give you the support you need.

Summary of the law - Business debt

Your rights

Your legal right is for the other side to keep to their side of an agreement (or to compensate you for failing to do what was agreed).
Therefore as a business, where you provided a product or service (so long as this is in accordance with what was agreed) then you’re entitled to be paid what was agreed.

What do you have to prove to bring a claim?

There was an agreement reached as to what each side will do. To bring a claim, you will need to show that the other side has not complied with all of their part of the agreement.

It is important to show that you have complied with what you were meant to do under the agreement.

If the other side is not paying because they were unhappy with the product or service you provided then you may need to show:

That the product or service provided to the other party were of satisfactory quality Consumer Rights Act 2015
That the goods and services were supplied at a reasonable time for use Consumer Rights Act 2015
That you supplied the product or service with reasonable care and skill Consumer Rights Act 2015

What evidence should you collect together?

The Quote
Letters/emails/texts between the 2 sides.
Invoices
Where relevant - photographs of the product or service

What can you claim?

Where 2 people or businesses reach agreement for the supply of a product or service for a price their agreement is known as a contract.
People do not always cover every aspect of the agreement. Therefore the law implies certain aspects – such as the product must be of a reasonable quality.
If one of them does not follow what was agreed (or what is implied by law) then the other can bring a claim:

to force the other to comply with the contract, or
for compensation for their breach of the contract.
If your contract or agreement with the customer gave you a right to interest if they were late in paying, then you can also claim this interest.

What is the deadline for starting a claim at court?

6 years from the date the contract was breached.

Example claims

Tradesman owed money by a customer.
Professional owed money by a client.
Business owes a supplier money.

Disclaimer reminder

Please note: To give you general information about your dispute, the information given here is a simplification of a complex area of law and cannot be relied upon. Before taking action please use our Small Claims service to get specialist legal advice on your specific circumstances. See the full terms and conditions of this website

Format - complaint letter

	Information to include	Sample letter – Sample letter – Business debt Money owed to “Fabulous Florists Ltd”
1	Start of official letter to other side.	[If you know the person’s name]: Dear Mr Smith, [If you do not know their name]: Dear Sirs,
2	Background Any relevant background information: What was agreed between you? What happened (in date order)? Be specific and refer to any written or verbal agreements	Background On 13 October 2013 your company, Brilliant Business, asked us (Fabulous Florists Ltd) to provide two pedestals and 12 table decorations for the County Business Awards. We had a telephone discussion about your requirements and agreed we would email our quote for the job. Later on 13 October we emailed you offering with our quote to provide the displays we had discussed for £1,200 (Including VAT). You then emailed us on 14 October accepting our quote. On 25 October 2013, Fabulous Florists provided Brilliant Business with the two pedestals and 12 table decorations as agreed. Brilliant Business were happy with the arrangements. On 26 October we sent your company our invoice number 000700 requesting payment of the £1200 within our usual business terms of payments within 14 days. I have kept copies of these documents should they be disputed. I also took photographs of the display provided.
3	Payments Details of any payments requested and any payments made.	Payment of invoice number 000700 It may be an oversight but no payment has been made to us by your company of the £1,200 due. This breaches the agreement between us.
4	Remedy Be as clear as possible about the remedy you would like. Say what action you would like them to take (or stop). Where you are asking for a payment - put a price on the you seek.	Remedy You are in breach of the agreement between us. Please see that the outstanding sum of £1,200 is paid within the next 14 days. It can be paid: by cheque payable to Fabulous Florists Ltd, or by card over the phone (call 0116 729 3402), or by direct transfer to account number 51205910, sort code 89 34 21.
5	Reply Give your opponent 14 days to reply to the letter – to either: agree with your complaint and give you the remedy that you seek OR arrange to inspect the problem OR set out their detailed response.	Reply Please do not ignore this letter. I would like us to try to resolve our dispute without court proceedings and legal costs. Please make the payment in the next 14 days, so that this dispute can be resolved as set out in this letter. If you do not agree that you are liable for the £1,200 then pease reply within 14 days with a detailed explanation of why not.
6	Consequences Point out that ignoring your letter will mean you may start legal proceedings for the court to deal with the dispute and that you may refer the judge to your letter.	Consequences I am sure it will not prove necessary but if I do not hear from you within 14 days, I reserve the right to start court proceedings without further reference to you. I will ask the court for an order that you pay me £1200. If I do have to issue court proceedings, I will refer the court to this letter and I will also ask the court to order you to pay me interest, court fees and legal costs. I look forward to hearing from you within the next 14 days.
7	Ending	[If you started with their name]: Yours sincerely, Ian Rate [If you started using Dear Sirs]: Yours faithfully, Ian Rate

Expert legal advice you can rely on:

Small Claims Service
Advice caused loss (Professional negligence)
Building work and property repairs
Business debt
Car or vehicle repairs
Credit Card
Hotel - poor service
Insurance company not covering claim
Internet purchase
Landlord and tenant dispute
Neighbour disputes
Pay or wage dispute
Shop purchase
Small Claims - Debt
Top Tips to making holiday claims
Travel - delays or lost luggage
Water supply and sewage

Small Claims Service

Experiencing disagreement and conflict can be uncomfortable, stressful and, if not dealt with promptly, the situation can escalate. Our team of experienced small claims solicitors can help you bring a fair end to your dispute quickly, so that you can end the stress and get on with your life.

Advice caused loss (Professional negligence)

If you have suffered a financial loss because of bad advice or a mistake made by a professional advisor then you may be able to claim compensation.

Building work and property repairs

Falling out with your neighbour can be particularly distressing for you and your family.

It can affect your enjoyment of your home and garden. It can also be intimidating knowing that you may have to pass your neighbour in the street.

Business debt

As a business you rely on prompt payment of the money you are owed by customers. Where a customer is late in paying this can cause your business cashflow problems.

Car or vehicle repairs

Where you have a dispute over repairs to your car (or other vehicle) the amount of your dispute (including losses and expenses) is likely to come to less than £10,000. Therefore you will need a cost –effective legal solution. Our Small Claims Service should be able to help.

Credit Card

You may also be able to get your credit card company to pay your claim for a faulty product or a poor service (including refunds or the cost of repairs) together with any extra losses and expenses you have suffered.

Hotel - poor service

Insurance company not covering claim

If something has gone wrong, then you will be relieved if you took out insurance to protect you against the risk.

Internet purchase

Landlord and tenant dispute

Both landlords and tenants can become unhappy because the other is not complying with the terms of their rental agreement. Landlord and tenant law can be quite complicated but the best solution is often found by having a conversation.

Where this fails, put your concerns in writing. Two of the most common situations are covered in the sample letters below.

If that still does not do the trick, you can use our service to take advice on your situation. We can help you with the next steps – which might be mediation.

Neighbour disputes

Pay or wage dispute

If you have not been paid what you think you are due, then you should speak to your boss (or line-manager) to find out why. This applies if the dispute is over pay or other benefits. It might just be an error. But it might be that there is a disagreement over what you are entitled to.

Shop purchase

Where you have a dispute over something you bought in a shop and the value of your dispute is less than £10,000, then our Small Claims service should be able to help.

Small Claims - Debt

Find out more about the law and your rights if you're owed money.

Top Tips to making holiday claims

Ever arrived at a hotel to find it isn’t anything like the brochure, or fallen ill as a result of dodgy hotel food or pool facilities? Whilst there’s no getting away from the disappointment problems like this can cause, remember there is something you can do about it.

Travel - delays or lost luggage

The main disputes you are likely to have with travel companies are delays to your journey and damage to your luggage.

Water supply and sewage

A clean water supply and drainage of sewage is taken for granted by most of us in the UK. We have an agreement with the local water company – we pay their charges and expect them to carry out their service in accordance with the terms of their agreement with us (and additional requirement the law places on them).

Have a question or need some help? Call us today on 0808 258 1345

Expert legal advice you can rely on,
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