14 Jul 2023
by Iain Young MCICM(Grad)

Best practice tips for legal processes

If you are in a position where you are considering legal action, this blog aims to explore some CICM best practice tips around the legal process to better inform your decision-making and knowledge on the processes involved.

Legal action for unpaid invoices

In Credit Management, you may need to recover unpaid invoices through legal action, make sure you consider the following:

  • Is it worth it? Are they worth suing? What assets do they hold? Do they have other debts?
  • Is there a valid contract in place which, ideally, has been signed by the customer?
  • Have you supplied the goods / services in accordance with your contractual obligations?
  • Have you exercised any securities, guarantees or retention of title clauses?
  • Have queries or disputes been sufficiently handled, and can you evidence your response?
  • Have you exhausted your standard credit control escalation process?
  • Have you issued a letter before action and provide a deadline for payment?
  • Have you tried speaking to the customer or using arbitration, to seek an agreement?
  • Have you asked your internal teams, such as your sales manager, to intervene for you?
  • Does the customer have a valid reason for not paying?

How to take the correct approach with Legal action

Once you’ve made the decision to proceed you need to decide which approach best suits the particular circumstances. The main options available are:

  1. Instruct a debt collection agency that has the time, expertise and resources to recover your debt. This can drive greater cash income and retain more customer goodwill than court action. Make sure you fully understand the charging structure before agreeing and use an agency that is registered with the Credit Services Association.


  1. Serve a Statutory Demand. If the debt is undisputed and greater than £750, this document can communicate your intent to begin insolvency proceedings. This can be done directly or with the help of a solicitor, with template forms available online. It can be in cases where you know the debtor has funds and the threat of insolvency is likely to make them respond.  However, if the Statutory Demand does not prompt payment and you proceed to insolvency, you may not recover your full debt if you are an unsecured creditor.



  1. Issue a claim in the court system, either directly or with the help of a solicitor. If your claim is less than £100,000 you can use the Money Claims Online service, which is relatively straightforward. Be aware that complex and defended cases could take a long time to process through the courts, and you may not recover all your costs. If you do secure a judgment at court, you have access to enforcement action to recover the debt. Four of the most used methods of enforcement are:


    • Warrant / Writ of Execution which orders the seizure and sale of assets to pay the debt
    • Third Party Debt Order which pays the money owed to your customer, directly to the debt
    • Attachment of Earnings Order which regularly deducts a proportion of wages to pay the debt
    • Charging Order against large value assets such as property, stocks and shares., which secures repayment of the debt when the asset is sold.

This best-practice summary outlines the most important aspects of the legal recovery process, from pre-legal considerations through enforcement.

This blog can better inform you on the legal processes involved and things to consider before you take legal action on collecting payments. If you feel that you may wish to explore these topics further, you could also benefit from our various CICM Training options.