Safeguarding you business in a challenging economy

As the year 2025 comes to a close, many businesses across Lancashire are continuing to feel the pressure of a difficult economic landscape.

Inflation remains persistently high, interest rates show little sign of easing, and cash flow challenges are becoming more widespread.

In this environment, recovering unpaid debts is not simply a legal matter, it is a vital part of maintaining business stability and ensuring long-term survival.

At Woodcocks Haworth and Nuttall Solicitors, we are seeing a noticeable increase in enquiries from commercial clients who are seeking support with debt recovery.

The reasons behind this trend are clear, late payments are becoming more common, and the risk of customers entering insolvency is growing. Businesses that do not act quickly and decisively may find themselves facing critical financial consequences.

So what can businesses do to protect themselves?

The first step is to ensure that your contracts are clear, comprehensive, and enforceable.

A well-drafted agreement should include specific payment terms, clauses that allow for interest to be charged on late payments, and provisions that enable you to recover legal and administrative costs.

These elements not only strengthen your legal position but also demonstrate that your business takes payment obligations seriously.

Next, it is essential to monitor your accounts receivable closely. Keeping a regular check on outstanding invoices allows you to identify overdue payments early and take prompt action. If a payment is missed, do not delay.

Contact the debtor immediately and maintain a detailed record of all communications.

A proactive approach can often prevent the situation from escalating.

If informal efforts to recover the debt do not succeed, consider sending a formal letter before action. This step often encourages payment without the need to begin court proceedings.

If legal action becomes necessary, the Practice Direction on Pre-Action Conduct promotes early engagement and resolution. This can strengthen your case and potentially reduce costs.

Most importantly, seek legal advice early in the process. A solicitor can help you assess the debtor’s financial position, explore settlement options, and advise on the most commercially sensible course of action.

Whether that involves negotiation, mediation or formal legal proceedings, early intervention can make a significant difference.

As Lancashire’s business community continues to navigate economic uncertainty, protecting your cash flow must remain a strategic priority.

Effective debt recovery is not just about chasing unpaid invoices, it is about securing the financial health and future of your business.