United Kingdom collection profile



PDF icon   Read the full Collections Profile
PDF icon   Read also the EH Economic Research Country Report
World Bank Doing Business
2014: 10/189 countries
2013: 11/189 countries

Complexity of collecting debt:

Notable High Very High Severe

Executive summary

  • An increase in the average DSO to 56 days for listed companies is a consequence of the country‘s rapid recovery, which has seen companies relying on longer credit terms to finance expansion.
  • Courts are efficient in delivering timely decisions but pre-legal action efforts remain the most effective. The longer the legal proceedings the greater the chances of facing insolvency issues.
  • The insolvency framework is oriented towards the protection of the creditor's rights, but an emphasis has been made on the need to rescue viable businesses. Such proceedings would however not guarantee that the debt would be recovered as in practice there are no limitations as to how much of the debt may be written off during renegotiations. Furthermore, liquidation proceedings would rarely yield any of the proceeds to unsecured creditors.
General Information GENERAL INFORMATION arrow-transparent
Collection Practices COLLECTION PRACTICES arrow-transparent
Court Proceedings Court PROCEEDINGS arrow-transparent
Insolvency Proceedings INSOLVENCY PROCEEDINGS arrow-transparent
General Information 


Days Sales Outstanding (DSO)

DSO has stretched to an average of 54 days for listed companies in the UK (2015 figures), an increase on previous years (+3 days since 2011). This increase is a consequence of the country‘s rapid recovery which has seen companies relying on longer credit terms to finance expansion.​


Late payment interest

Directive 2011/7/EU which stipulates that payments in the EU must be made within 60 days has been transposed into domestic law through the Late Payment of Commercial Debts Regulations 2013 (which amends the Late Payment of Commercial Debts (Interest) Act of 1998). The transposing law is in line with the Directive but remains more permissive than regulations set forth in other EU Member States: invoices must be paid within 60 days, unless expressly agreed otherwise and provided it is not unfair to the creditor. As a result, interest on late payments representing a 'substantial remedy' may be claimed, either on the basis of the contractual agreement, or on the basis of the Bank of England's base rate being increased by at least 8 percentage points. Late payment interest can be added to the debt and recovery attempted.

In addition, UK legislation provides for fixed compensation for debt recovery costs of GBP 40. With the new law, creditors are also allowed to recover 'reasonable' costs in excess of this flat fee. Costs will be added to the debt and recovery attempted.

collection practice 


Orchestrated negotiation first

Domestic courts are reliable and since 1999 regulatory reforms have significantly improved litigation proceedings, but amicable settlement opportunities should nonetheless be considered as a serious alternative to formal legal proceedings. Before starting legal proceedings against a debtor, in addition, assessment of assets is important as it allows verification as to whether the company is still active and whether recovery chances are good. In addition, it is essential to be aware of the debtor’s solvency status: if insolvency proceedings have been initiated, it indeed becomes impossible to enforce a debt (see below).

Court Proceeding 


The UK is split into three distinct legal systems, the laws of England and Wales, the laws of Scotland and the laws of Northern Ireland. The law is partly provided through Statutes, however the decisions rendered by Higher Courts are considered as a binding Case Law which must be followed by the Lower Courts. The information provided in this profile relates to debts, contracts and claims which are governed by the laws of England and Wales. Proceedings in the Commercial Court are governed by the Civil Procedure Rules (CPR). County Courts would typically deal with small claims (professional negligence, personal injury) below GBP 50,000, whilst the Queen’s Bench Division deals with most contract (and tort) claims. The Chancery Division may also consider some contractual disputes although it would rather deal with claims involving trusts, estates, land, mortgages, deeds, partnerships as well as corporate insolvency matters. In addition, specialized judges render judgments in the Commercial Court (High Court), the Bankruptcy and Companies Court, and the Patents Court (Chancery Division).

Legal action will usually be commenced when amicable collection has failed. Before issuing a claim, the claimant must send the defendant a detailed letter, setting out a clear summary of the facts on which the claim is based, enclosing any supporting documents and giving the defendant a reasonable time to respond. The defendant should respond confirming whether the claim is accepted and if not, why, providing evidence in support. Both parties should act reasonably in attempting to resolve matters before proceedings and they should continue to act in this way throughout the claim otherwise the court has powers to penalize unreasonable behaviors. Summary judgments may be obtained provided that the debt is certain and undisputed. For instance, if the debt is in excess of GBP 750, a statutory demand procedure (costing around GBP 1,500) allows the request of payment within 21 days (it also allows filing a winding up petition if the debtor does not react). When the debtor company has assets in other EU Member States, a European Payment Order procedure facilitating the recovery of undisputed debts (under Regulation EC No 1896/2006) may furthermore be triggered. In this case, the demanding party may request a domestic court to issue an Order to Pay which will then be enforceable in all European Union countries (except Denmark) without exequatur proceedings. If litigation is unavoidable, the claim will be issued by the appropriate court and served on the defendant, who is given 14 days from service to acknowledge the claim or file a defence. If the defendant acknowledges the claim within that timescale, he will be given a further 14 days (i.e. a total of 28 days from service of the claim to file a defence) but if the defendant fails to file a defence to the claim, the claimant can apply to the court for default judgment. If the defendant does file a defence and the claimant considers that it is without merit and unlikely to succeed, they can apply to the court for strike out of the defence and/or summary judgment. The court will usually list a hearing of the application and the claimant will need to show the court that the defendant has no reasonable prospect of defending the claim and that there is no other reason why the claim should proceed to trial. If the claimant is successful, judgment will be entered against the defendant and the claimant can seek fixed costs of the application. If the application is not successful, the claim will continue as a defended claim as set out below. If a defence to the claim is filed, the court will allocate the claim to a particular track depending on its value (Small Claims Track for cases where the value of the claim is below GBP 10,000, Fast Track for cases up to GBP 25,000 likely to last for less than one day and where expert evidence is limited to one expert per party and in only two fields, Multi Track for all other claims). If the claim is allocated to the small claims track, the court will set a date for the final hearing (which is informal) and at which the court will make a decision. If the claim is allocated to the fast track or the multi-track, the court will set directions for the management of the claim to trial rather than just list a final hearing as on the small claims track. Directions will include the disclosure of evidence by each party, the exchange of witness evidence and the listing of a trial date. On the multi-track the court may order that the parties attend a case management conference prior to trial to ensure that the parties have complied with the directions and that they are ready for trial. When issuing a claim, the claimant will set out what remedy they seek and this may include a money judgment for a debt, compensatory damages, mandatory or prohibitory injunctions, declarations, specific performance and orders for sale of property.

insolvency Proceeding 


Insolvency in the UK may be considered from different perspectives. On the one hand, the term 'Bankruptcy' in the UK only applies to insolvent individuals, but these may have few or no assets so that bankruptcy proceedings would not usually be cost effective to pursue because the unsecured creditor would receive a very low dividend or no dividend at all. Nonetheless, bankruptcy proceedings may be used against individuals (such as sole traders) liable for undisputed debts over £750, provided that the creditor is able to show that the debtor is unable to pay. Petitions should be presented in the nearest county court and must be personally served on the debtor within 14 days of the date of the bankruptcy hearing. If a bankruptcy order is made, either the Official Receiver or Trustee in Bankruptcy will attempt to realize assets for the benefit of creditors. There are numerous rules concerning the assets that might be realized and the way in which the Official Receiver/Trustee must conduct the realization. There are also rules as to how creditors will be paid, for example secured and preferential creditors will be paid first and unsecured creditors will receive a pro rata dividend on conclusion of the bankruptcy. There are also statutory provisions which may assist the Official Receiver/Trustee, for example the ability to set aside transactions entered into by the debtor immediately prior to bankruptcy which were designed to put assets beyond the reach of creditors. Having said this, if the debtor has few or no assets, bankruptcy will not usually be cost effective to pursue because the unsecured creditor may receive a very low dividend or no dividend at all. Individual Voluntary Arrangements may also be concluded: these are legally binding agreements between the debtor and his creditors which normally last for five years, a period during which the debtor will be expected to pay what he can afford outside reasonable living costs into the IVA. All interest and charges will be frozen to 0% and creditors will be prohibited from demanding additional payments. Once the IVA is accepted by the creditors, the Insolvency Practitioner will monitor the IVA's progress and distribute payments to all creditors on a pro-rata basis until the successful completion of the IVA. Debtors will often enter into an IVA to avoid being declared bankrupt. On the other hand, various proceedings may also be conducted against insolvent companies (as provided under the Insolvency Act of 1986, as amended in 2000), which broadly defines insolvency as the state of a company deemed unable to pay its debts as they fall due, or if the value of its assets is less than the amount of its liabilities taking into account its contingent and prospective liabilities. Corporate insolvency proceedings will be considered below.


Talk to one of our debt collections experts near you.

> Email us now



> For more information on local collection practices, court proceedings and insolvency read the full Collections Profile


map icon Go back to the world map