Glossary of UK commercial debt recovery terms

Acceptance: The debtor's conduct indicating agreement to the contract. Performance, partial payment, or use of the goods or services usually constitutes acceptance even where the terms were not expressly signed.
Adjudication: A 28‑day quasi‑judicial dispute‑resolution procedure available under the Housing Grants, Construction and Regeneration Act 1996 for construction contracts. The adjudicator issues a binding interim decision; either party can subsequently challenge in court but must comply in the meantime. Used in our work where construction debts are genuinely disputed on quantum or scope. See our construction sector page.
Aged debt: Debt classified by the period elapsed since its due date, typically in 30, 60, 90, and 120‑plus day buckets. Older debt is harder to recover; collection probability falls sharply after the 90‑day bucket. Recovery costs and statutory interest under the Late Payment Act both increase with age.
Attachment of earnings order: A court order requiring an individual judgment debtor's employer to deduct sums from wages. Limited utility where the debtor is a company.
Bank of England base rate: The reference rate on which statutory interest is calculated. Fixed for six‑month reference periods ending 30 June and 31 December. The statutory rate that applies to a debt is the rate in force on the last reference date before the debt went into default.
B2B debt: A debt arising from a commercial transaction between two businesses. The Late Payment Act applies only to business‑to‑business debt; consumer and sole‑trader debts are outside its scope.
Bailiff: A County Court enforcement officer authorised to execute warrants of control on judgments below £5,000 (or transferred to the County Court by election). Distinct from a High Court Enforcement Officer (HCEO), who has stronger powers and acts on judgments of £600 or more once transferred up to the High Court.
CCJ (County Court Judgment): A formal court ruling that the debtor owes the creditor a specified sum. Recorded on the Register of Judgments for six years and visible on most commercial credit reports. Enforceable against the debtor's assets. See our CCJ guide.
Charging order: A court order securing a judgment debt against real property owned by the debtor. Enables sale of the property to satisfy the debt in due course.
Companies House: The UK register of limited companies and LLPs. The source of registered office addresses, director names, filed accounts, and compliance history. Free to search at find-and-update.company-information.service.gov.uk.
Contingency fee: A fee charged only on a successful outcome. In commercial debt recovery, synonymous with no‑win‑no‑fee: the recovery firm earns nothing unless funds are collected. Our commission operates on this basis across every tier. See our fees page.
Contractual payment term: The period within which the debtor is required to pay, as stated in the contract. Capped at sixty days for B2B contracts unless the parties have expressly agreed otherwise and that agreement is not grossly unfair to the creditor.
Creditor: The party owed money under a contract. In commercial debt recovery, typically a limited company supplying goods or services to another business.
Debtor: The party owing money under a contract. We act only against UK limited companies and LLPs on undisputed commercial debts.
Default (date of): The date on which the debt ought to have been paid and was not. Statutory compensation attaches and statutory interest begins to accrue from this date.
Default judgment: A judgment entered by the court without a hearing because the defendant has not filed a defence within the response window. The most common outcome on undisputed commercial debt claims. See our CCJ guide for the procedural detail.
Debenture: A document granting a lender a security interest, usually a fixed and floating charge, over the assets of a company. Where a company has granted a debenture to its bank, the bank is a secured creditor and ranks ahead of unsecured creditors in any insolvency process. Trade creditors are typically unsecured and rank below debenture holders.
Director's fiduciary duty: The obligation of a company director to act in the company's best interests, under sections 170 to 177 of the Companies Act 2006. Engaged where a company withholds payment on an undisputed commercial debt. See our limited company recovery guide.
Fast track: The court track for claims between £10,000 and £25,000. Costs of the successful party are generally recoverable from the losing party, unlike the small claims track.
Fixed compensation: See Statutory compensation.
High Court Enforcement Officer (HCEO): An officer authorised to enforce High Court writs of control by entering business premises and taking control of the debtor's goods. Stronger powers than County Court bailiffs. Used after a CCJ has been transferred up to the High Court for enforcement on judgments over £600.
ICO registration: Registration with the Information Commissioner's Office, required of organisations processing personal data for a business purpose. Our registration number is ZB000000.
Indemnity costs: A higher basis of costs assessment in court proceedings, awarded against a party who has acted unreasonably. Compares with the standard basis, which is the default. On indemnity costs, the receiving party recovers all costs that are not unreasonable in amount, with the burden of proof on the paying party to challenge particular items. Rare in straightforward debt recovery; sometimes awarded against debtors who manufacture spurious defences.
Insolvency: The state in which a company is unable to pay its debts as they fall due (cash‑flow insolvency) or its liabilities exceed its assets (balance‑sheet insolvency). Either state can ground a winding‑up petition under the Insolvency Act 1986. The directors' duties shift on the approach to insolvency to consider creditor interests.
Instalment plan: A structured schedule for paying down a debt over time. We accept plans of up to three months without escalation, subject to signed terms; longer plans require specific client authority.
Late Payment Act: Shorthand for the Late Payment of Commercial Debts (Interest) Act 1998 and the Late Payment of Commercial Debts Regulations 2002. The statute and secondary legislation that govern commercial debt recovery in the UK. See our pillar guide.
Letter Before Action: A formal letter giving the debtor a last opportunity to pay before court proceedings are issued, as required by the Practice Direction on Pre‑Action Conduct. See our LBA template.
Limitation Act 1980: The statute that governs the time within which different categories of legal claim must be brought. Simple contract debts (including unpaid commercial invoices) become statute‑barred six years after the debt fell due. Debts under a deed have a longer twelve‑year period. After the limitation period expires, the debt is unenforceable.
Limited company: An incorporated entity registered at Companies House with its own legal personality, distinct from its shareholders and directors. The core counterparty type we act against.
Liquidation / winding up: The formal process of closing a company and distributing its assets. A statutory demand for an undisputed debt over £750 can be the first step towards a winding‑up petition against the debtor.
LLP (Limited Liability Partnership): A hybrid legal entity combining partnership flexibility with limited liability for the members. Registered at Companies House. Treated on the same footing as a limited company for our purposes.
Money Claim Online (MCOL): The online portal for issuing money claims under £100,000 in the County Court. Court fees scale with claim value. Suitable for undisputed claims with documentary evidence; complex matters are better filed on paper at a court counter.
Multi‑track: The court track for claims over £25,000. The full procedural framework of the Civil Procedure Rules applies, including disclosure, witness statements, and case management. Higher cost trajectory; only matters that escalate despite earlier intervention typically reach this track.
No‑win‑no‑fee: A pricing arrangement under which the recovery firm charges nothing unless funds are recovered from the debtor. Removes upfront cost and aligns the firm's incentives with the creditor's. Equivalent to a contingency fee. Our entire fee schedule operates on this basis: commission is charged only on successful recovery, tiered by the size of the debt. If no funds are collected, the creditor pays nothing. See our fees page.
Order to obtain information: A court order requiring a judgment debtor or, if a company, its officers to attend court and answer questions about the debtor.s assets and means under oath. Useful preparation when the creditor does not know enough about the debtor.s position to choose an enforcement route. Rarely needed where the debtor.s accounts at Companies House give a sufficient picture.
Payment plan: A structured schedule for paying off a debt over time, typically agreed between creditor and debtor as an alternative to immediate payment in full. We accept payment plans of up to three months without escalation, subject to signed terms; longer plans require specific client authority. A payment plan does not extinguish the debt; it suspends enforcement while payments are being made on time.
Personal guarantee: An undertaking, typically signed by a director or shareholder of a small company, that the individual will pay the company.s debts personally if the company defaults. Common in trade credit applications and supply contracts. Where in force, the creditor has direct personal recourse against the guarantor for the full balance of the company.s default. Always check the original paperwork.
Pre‑action protocol: The body of court rules requiring parties to exchange information and consider settlement before issuing proceedings. The general rules for unpaid commercial debt are in the Practice Direction on Pre‑Action Conduct; specific protocols apply in some sectors.
Practice Direction on Pre‑Action Conduct: The court rules, part of the Civil Procedure Rules, governing what parties must do before issuing proceedings, including service of a Letter Before Action with a schedule of sums claimed.
Prescribed rate: The statutory rate of interest that applies under the Late Payment Act, fixed at eight per cent above the Bank of England base rate. See Statutory interest for the calculation.
Principal: The underlying debt amount, excluding statutory compensation, statutory interest, and recovery costs. The sum we remit to the creditor on successful collection.
Reasonable costs of recovery: The creditor's reasonable expenses of pursuing the debt, recoverable from the debtor to the extent they exceed the fixed statutory compensation. Our fee falls within this category under Regulation 5A.
Recovery costs: See Reasonable costs of recovery.
Regulation 5A: The provision of the Late Payment of Commercial Debts Regulations 2002 that permits recovery of the creditor's reasonable debt‑recovery costs from the debtor. The statutory basis for our fee.
Remittance: The transfer of recovered funds from our designated client account to the creditor's nominated account, typically within ten working days of cleared payment.
Retention of title (Romalpa clause): A contractual provision that title to goods does not pass from supplier to buyer until the buyer has paid in full. Where the buyer holds unpaid stock, the supplier retains a proprietary interest and can recover the goods, including in the buyer.s insolvency. Strongest in the form of an "all monies" clause that retains title in any stock until all amounts owing on the account are paid.
Secured creditor: A creditor whose debt is secured against an asset of the debtor (a charge on property, a debenture over the company, a chattel mortgage). In a liquidation, secured creditors rank ahead of unsecured creditors and are usually paid in full before unsecured creditors receive anything.
Set‑off: The legal right of one party to deduct sums owed by the other from a debt being claimed. A debtor may raise set‑off as a defence: "I owe you £5,000 but you owe me £3,000, so I owe you £2,000." Genuine set‑off claims with documentary evidence can defeat or reduce a claim. Manufactured set‑off raised after demand rarely succeeds.
Small claims track: The court track for claims up to £10,000. Designed to be handled without lawyers; costs recovery is limited to fixed fees and disbursements.
Standstill agreement: An agreement between creditor and debtor to suspend the running of the limitation period while settlement discussions continue. Useful where a debt is approaching the six‑year limit but the parties want to negotiate without the creditor having to issue protective proceedings. Must be in writing and signed; oral standstill agreements are not effective.
Statute‑barred: A debt that can no longer be enforced because the limitation period has expired. Under the Limitation Act 1980, simple contract debts are statute‑barred six years after they fell due. Pursue early; do not let limitation expire.
Statutory compensation: A fixed sum payable on default under Regulation 5: £40 for debts up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 and above. Per invoice, not per creditor.
Statutory demand: A formal demand under section 123 of the Insolvency Act 1986 requiring payment of an undisputed debt over £750 within twenty‑one days, failing which the creditor may petition for the debtor's winding up. See our statutory demand guide.
Statutory interest: Interest on the unpaid debt at the prescribed rate of eight per cent above the Bank of England base rate, accruing daily from the date of default. Calculate the figure for your invoice in our interest calculator.
Third‑party debt order: A court order requiring a third party, commonly the debtor's bank, to pay sums owed to the debtor directly to the judgment creditor instead. A useful enforcement route where the debtor holds money in a known account.
Tiered commission: A commission structure where the percentage charged depends on the size of the debt recovered. Smaller debts attract a higher percentage to reflect fixed handling costs; larger debts attract a lower percentage as those costs are diluted across the recovery. Our schedule: 15% on debts up to £10,000, 12.5% to £50,000, 10% to £250,000, and a negotiated rate from 8% above. See our fees page.
Time‑barred: See Statute‑barred. Synonymous in commercial practice; the limitation period for simple contract debts is six years from the date the debt fell due.
Undisputed debt: A debt that the debtor has not, on any substantive basis, contested before or at the due date. The only category of debt we accept. Attempts to manufacture a dispute after demand generally do not render the debt disputed in the legal sense.
Unsecured creditor: A creditor whose debt is not secured against any asset of the debtor. Most trade creditors are unsecured. In a liquidation, unsecured creditors rank below secured creditors, preferential creditors, and the costs of liquidation; recovery is typically pennies in the pound, after lengthy delay.
Without prejudice: A label applied to correspondence intended to negotiate settlement, which the parties agree cannot be referred to in court if the negotiation fails. Used in payment‑plan discussions and dispute resolution. The label has no effect unless the correspondence is genuinely in the course of settlement negotiation.
Winding‑up petition: A petition presented to the Companies Court asking the court to wind up the debtor company, typically following an unanswered statutory demand. Once presented and advertised in The Gazette, the petition has serious commercial consequences for the debtor including the freezing of bank accounts. See our statutory demand guide.
Writ of control: A High Court writ authorising enforcement officers to take control of the debtor's goods to satisfy a judgment. Available on debts over £600 once judgment has been obtained.
Wrongful trading: The conduct of a director who allows a company to continue trading when they know, or ought to know, there is no reasonable prospect of avoiding insolvent liquidation. Personal liability for the directors can follow under section 214 of the Insolvency Act 1986. Pursued by a liquidator after liquidation; useful in correspondence as a reminder of personal exposure.

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