Short answer: for an undisputed invoice owed by a trading company, a debt collection agency is usually the more proportionate first step: no court fee up front, no court timetable, and a fee only if money is recovered. The small claims court is the better route when the company has a real dispute that needs deciding, or has already ignored a pre-legal approach and you need a judgment to enforce.
When a business customer will not pay, two routes come up again and again: issue a claim in the small claims court, or hand the invoice to a debt collection agency. They are not opposites. Many creditors try an agency first and use the court only if needed. This guide compares the two on cost, time, effort and outcome, so you can choose calmly.
Debt Collection UK is a trading name of PASECOM GROUP LTD. We introduce unpaid invoices owed by limited companies, LLPs and PLCs to independent partner agencies, who collect. We do not issue court claims ourselves, we are not solicitors, and we are not authorised by the FCA.
What does each route cost up front?
The small claims court
You pay a court issue fee when you start the claim, banded by the amount claimed including interest. The current bands are on the GOV.UK court fees page. If the claim is defended and goes to a hearing, there is a hearing fee. If you win and the company still does not pay, each enforcement application has a further fee. You can usually recover court fees from the debtor if you win, but on the small claims track most legal costs are not recoverable.
A partner agency through Debt Collection UK
There is no upload fee. The fee is a fixed 15% of what is recovered, charged only when you are paid. If the agency recovers nothing, there is no commission. Recovery is not guaranteed, and the 15% fee follows the result. See no collection, no fee explained.
How long does each route take?
Court timetable
Court timings are set by the Civil Procedure Rules and by court workload. After a letter before action, the company has 14 days from service of the claim to respond, or 28 days to file a defence if it acknowledges service. An undefended claim against a company can reach judgment in roughly five to eight weeks. A defended claim goes through allocation and, for fixed-sum small claims, mediation, before a hearing is listed; that usually takes months. See how long it takes to get a CCJ.
Agency timetable
An agency can usually start contacting the company within days of instruction. There is no fixed timetable to wait for. Some debts are paid quickly once a third party is involved; others take negotiation or a payment plan. Some are not recovered at all.
How much work is involved for you?
With the court, you do the work unless you pay someone to do it: completing the claim, responding to a defence, preparing a bundle and witness statement, attending a hearing, and applying for enforcement.
With an agency, you supply the invoice, any contract or order, proof of delivery and your correspondence, then answer questions as they come up. The agency does the chasing.
What happens at the end of each route?
A court judgment is a formal decision that the money is owed. It gives you access to enforcement methods such as a warrant of control, a third-party debt order or a charging order. But it is not payment; you still need the company to pay or to have assets you can reach. See how to enforce a CCJ against a limited company.
An agency cannot force payment. It cannot take goods, freeze accounts or pretend to be a court officer. What it can do is apply professional, lawful pressure, negotiate and, if pre-legal work fails, explain the court options and costs so you can decide.
How do the two routes compare side by side?
- Up-front cost: court — issue fee, then hearing and enforcement fees; agency — none, 15% only when you are paid.
- Speed to first contact: court — after issue and service; agency — usually within days.
- Your time: court — significant; agency — limited to providing documents.
- Disputed debts: court — decides them; agency — not suitable until the dispute is resolved.
- Power to compel: court — yes, through judgment and enforcement; agency — no, persuasion and negotiation only.
- Insolvent debtor: neither route creates money. Check first.
Which route suits which situation?
Choose an agency first when the invoice is undisputed, the company is still trading, and your own reminders have stalled. It avoids up-front fees and keeps things moving.
Choose court when there is a real dispute that needs a decision, when the company has already ignored an agency, or when you need a judgment to use enforcement or to protect your position before the limitation period runs out under the Limitation Act 1980.
Whichever route you take, send a proper letter before action first. For a company debtor, follow the Practice Direction – Pre-Action Conduct and Protocols and give 14 days in a straightforward case. Our guide to the final demand letter includes a template.
What about interest and compensation?
Your statutory rights apply on either route. On a qualifying commercial debt, the Late Payment of Commercial Debts (Interest) Act 1998 gives interest at 8% above the Bank of England base rate, fixed compensation of £40, £70 or £100 per invoice, and reasonable recovery costs under section 5A. An agency can include these in its demand; a court claim can include them in the amount claimed.
What should you check before choosing either route?
Three quick checks save money on both routes. First, confirm the debtor’s exact name, number and status on Companies House; a claim or demand against the wrong entity goes nowhere. Second, look for insolvency notices in The Gazette; if the company is in a formal process, you will usually need to claim in that process instead. Third, gather your evidence: the order or contract, proof of delivery, the invoice and your reminders. A clear file helps an agency negotiate and helps a judge decide.
Frequently asked questions
Can I use an agency and then go to court?
Yes. That is a common sequence. The agency’s file and correspondence can support a later claim.
Is the small claims court only for claims under £10,000?
Defended claims up to £10,000 are normally allocated to the small claims track. You can still issue larger claims in the county court; they go to other tracks.
Will an agency take a disputed invoice?
Generally not until the dispute is resolved or clearly without substance.
Do you accept consumer or sole-trader debtors?
No. We accept limited company, LLP and PLC debtors only.
Want to try the agency route first?
If the debtor is a limited company, LLP or PLC and the invoice is undisputed, upload it using the form below. We introduce it to an independent partner agency. The fixed fee is 15% of what is recovered, only when you are paid.