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“Bad debt”– thought you’d lost your money to a supplier or customer? Think again

With an expensive Christmas, increased business and interest rates, we all want the money owed to us back in our pockets.

Business or individual, most of us cannot afford to write off debt, yet so many of us do.


You will be astonished to learn that £5.8 billion in the UK was written off by small businesses in 2015-16 and called bad debt. If you are not already aware, “bad debt” is money owed to businesses that are considered uncollectable; usually because the debtor is not forthcoming in paying up.

Why was so much written off?
  • Wasted time
  • Diminished reputation
  • Better things to be doing
  • I can just about do without
  • Legal fees too high

Any of the above sound familiar? Unless we are talking about a loan given to your children, in which case, we often must sacrifice our own cashflow, recovering your money should be at the top of your agenda.

First priority must be the preventative measures and, secondly, if it cannot be prevented, what is the most cost/time effective way of managing a bad debt once it happens?

Here are some tips from the professionals who recover money for people daily…

Best ways to prevent bad debt:

  • Do all parties involved share the same expectations?
  • At the very minimum, have some written evidence stored and filed. At best, a written agreement between both parties, an email exchange and at worst (not recommended), a text for reference.
  • A traceable transaction ie, money lent via a bank transfer therefore no one can dispute the finances.
  • Avoid cash transactions without reliable written evidence in support.
Further prevention for a start-up, or SME:
  • At the very least, a solid contractual agreement signed by both parties and at best a bespoke, written contract with your specific terms and conditions.
  • Clear and informative “small print”.
If someone refuses to pay you back or for your services, then what?
  • By putting the preventative measures in place as mentioned above, you put yourself in the best possible position to recover the money owed.
  • File all your correspondence.
  • Have a free Bad Debt Audit carried out with a legal team speaking to you/your accounts team to identify the best way forward.  They will establish how likely are you to recover the money owed and whether it is worth pursuing. In some cases, the debt may be too small and not worth paying a professional, but asking the question does no harm.
  • Engage with a professional firm who may recover the debt within your social boundaries and for a reasonable fee.

Too many bad debts are written off without consideration.  Take some time to understand whether money owed can be returned back to you.

This article was written by Elizabeth Roberts and Keeley Gregory at Griffin Law

Published on 11th January 2018
(Last updated 10th July 2023)