A few weeks ago, we took on a new client and, as we always do, asked whether they had any debts from the past five years that had been written off (excluding insolvency) that we could review. In our experience, many debts are written off simply because they have never been properly chased, or because matters have become adversarial and the perceived costs of legal action or solicitors result in debts being written off prematurely.

In many cases, “written off” does not mean formally resolved. No credit note has been issued, no agreement reached—the matter is left in limbo.

They provided three debts, all of which had been disputed.

Our initial checks showed one debtor had ceased trading, so no recovery there. A second matter was very poorly documented, but services had clearly been provided and used. We managed to negotiate a 50% settlement. There is no doubt that this settlement was made on a perceived legal costs basis.

The third case was very different and worth tens of thousands of pounds. This was a three-year signed contract that was suddenly cancelled.

At the outset, when we contacted Company Three, the Managing Director stated that this matter had not been pursued for several years, implying it had been written off (which it had). We advised the MD that under the Limitation Act, the invoice remained legally valid.

The MD stated that the services provided were not fit for purpose and that this was why the contract had been cancelled. When pressed, he admitted this position was based entirely on what a rival supplier—who had replaced our client—had told them, namely that using their calculations, a liability could have been reduced by an eye-watering amount.

Further investigations revealed that the Finance Director, who had decided to terminate our client’s contract early—who was no longer with the company—had previously used the new supplier in his former role.

We put this to our client, who immediately stated that if evidence was provided to support these allegations, they would issue a full credit. This offer was passed on, but the customer refused to provide any documentation, claiming the rival supplier had told him that their calculations were commercially sensitive and that he would defend vigorously any legal action taken.

It was explained to the MD that the matter was being dealt with under the Civil Procedure Rules, which required disclosure, and that he was now indicating he would vigorously defend any legal action, no doubt relying on the very documents he was refusing to disclose.

We explained the potential cost implications of failing to comply with the Civil Procedure Rules. We also advised him that if the matter was settled immediately, no interest or recovery costs would be sought. He was then advised to seek independent legal advice.

The following day, the MD emailed asking for confirmation that payment of the capital amount would be accepted in full and final settlement. We confirmed, and the full amount was paid by BACS that afternoon.

If you have any similar matters on your books, no matter how small (within reason), why not let us have a look? We will review them at no cost and provide a clear view of the prospects of recovery.