In business, we often hesitate to take legal action on an unpaid invoice because we want to preserve the relationship. We tell ourselves, “They’re good for it,” or “They’re just having a slow month.”
However, in the current economic climate of early 2026, patience is no longer a virtue – it is a financial risk.
With insolvency figures in high-risk sectors like Construction, Retail, and Hospitality remaining stubbornly high, the line between a late payer and an insolvent debtor is becoming dangerously thin.
The Brutal Truth About Unsecured Creditors
The main reason we teach businesses how to issue their own County Court claims is control. When you wait for a debtor to pay you voluntarily, you are handing them control of your cash flow.
If that debtor goes into administration or liquidation while you are “waiting nicely,” you join the queue as an unsecured creditor.
If you have ever been in this position, you know the reality:
- The Insolvency practitioners take their fees.
- Secured and preferrential creditors get paid first.
- You (and all the other suppliers) are left fighting over the crumbs. Often, this results in receiving pennies on the pound, or worse—nothing at all.
The Warning Signs are There
You don’t need a crystal ball to see when a company is in trouble; usually, their payment behaviour tells you everything you need to know.
If you are seeing any of these red flags, you need to stop waiting and take action:
- Broken Promises: They promised payment on Friday. It’s now Tuesday.
- Ghosting: Accounts departments that used to answer the phone are now silent.
- Partial Payments: Paying “round sums” (e.g., £500 off a £2,456 bill) rather than specific invoices. This is a classic sign of cash flow juggling.
Why You Must Move First
A company struggling with cash flow will prioritise the creditors who are shouting the loudest. By issuing a Letter Before Action or a Claim in the County Court, you move yourself to the top of their “Must Pay” pile—often effectively forcing them to pay you to avoid the judgment damaging their credit rating further.
If you wait until they officially collapse, it is too late. The window of opportunity to recover your money closes the moment the insovlency process kicks in, as the formal insolvency process creates a moratorium on all legal action.
Payments made shortly before an insolvency process are sometimes challengeable by the insolvency practitioner, if it takes the view you have unfairly received a payment in preference to other creditors.
Take Action
We believe that you shouldn’t have to pay a solicitor hundreds of pounds an hour to carry out what is a straight forward process.
The civil courts are there for you to use. It is a tool designed to enforce contracts and ensure you get paid. But like any tool, it only works if you pick it up.
SV Legal is here to help! If you are struggling with overdue invoices, we can help you. We can guide you through the debt recovery process and to get paid for the goods and services you provide.
