The small claims court for businesses
The small claims court can be a very useful resource for small businesses who've been left out of pocket or who have experienced bad service or damage. Taking legal action should always be considered a last resort for claiming back money - but if you feel that things have got to that stage, read this guide to find out more.
What is the small claims court?
People talk about the 'small claims court', but all this really means is a small claim that goes through the normal county court. The process is called the small claims track. You don't need a solicitor to make a small claim. Debts of up to £5,000 are dealt with as small claims through your local county court - you can find your local one at Her Majesty's Courts Service (HMCS) here.
In Scotland, you use the sheriff court, and in Northern Ireland, the maximum amount for small claims varies. It's best to get legal advice for claims more than £5,000 - these must be issued in either your county court or the high court.
How the small claims court can help you
The small claims court can help you recover debts owed to you that you can't get back any other way. You can also issue claims for damage to your property, bad workmanship, goods not supplied or faulty goods, personal injury or road traffic accidents.
Why it might not be the right choice
Taking legal action should always be a last resort. Consider how cost-effective making a claim will be, as you need to pay a fee (the amount depends on the claim).
It might be easier, cheaper and a lot less time-consuming to write off small sums. If the customer in question looks set to make lots of orders in the future, it's probably worth forgetting about this bit of debt so you can get more business from them in the future. And if it's only a small amount, don't get carried away with proving a point by making a claim - you don't want to get a bad reputation amongst customers.
How to make a claim
Issue your claim by visiting your local county court, or online at www.moneyclaim.gov.uk. You need to fill out a form, also available online at the HMCS website, which you give a copy of to the defendant (the person or business you're making the claim against) and the court. The court gives you notes and guidance on how to make your claim, and the defendant gets sent a defence pack detailing the claim against them. They then either accept the claim and pay out or dispute it - your court can advise you what to do if this happens.
For further financial advice, take a look at our Start Up advice for articles on financial management, business planning and more.