Debt recovery for small businesses: 2026 guide
For a small business, an unpaid invoice isn't just an accounting problem: it can freeze cash flow, hold up payments to your own suppliers and, in the worst cases, put the whole operation at risk. Yet many business owners wait months before acting, hoping for a spontaneous solution that rarely comes.
This guide explains the practical steps to recover a debt quickly and effectively.
The SME advantage: the law is on your side
In commercial transactions between businesses, Legislative Decree 231/2002 provides specific protection for creditors:
– Automatic late-payment interest from the 30th day after the due date (no need for a formal notice)
– Rate of 10,15% a year for the first half of 2026 (ECB + 8 points)
– €40 flat fee for each late invoice (art. 6 Legislative Decree 231/2002)
If your invoices are due at 60 days and the customer pays at 120, you're already accruing interest and flat-rate compensation that you can claim.
The three most common mistakes SMEs make in debt recovery
1. Waiting too long. Every month without action reduces the chances of getting paid: the debtor may become insolvent, move assets or start insolvency proceedings. The limitation period for trade debts is 10 years, but don't wait.
2. Trusting verbal promises. “I'll pay you next week” doesn't stop the limitation period or protect you. Get every promise to pay in writing (email, certified email) and keep it as evidence.
3. Giving up so as not to “spoil the relationship”. The business relationship is already damaged when the customer doesn't pay. Acting professionally and promptly protects your company, and it's often exactly what pushes the debtor to settle.
The best sequence for an SME
Stage 1 — Internal reminder (0-30 days after the due date)
Before involving a lawyer, your accounts office sends a formal email quoting the invoice number, amount and due date. If you have a sales manager, they can contact the customer's contact person to understand the situation.
Stage 2 — Formal notice of default (30-60 days)
If the reminder gets no result, it's time for a formal notice of default by certified email (PEC) or recorded delivery. At this point it's worth involving a lawyer: a letter signed by a lawyer has much more impact and often settles the matter without going to court.
Stage 3 — Legal negotiation
The lawyer contacts the debtor on your behalf and weighs up the options: full payment, a repayment plan, a settlement. Where there are several debts from the same customer, negotiating them all together is often more efficient than separate proceedings.
Stage 4 — Payment order
If negotiation doesn't work, a payment order is the fastest tool available: the judge issues the order to pay in 15-60 days, without hearing the other side. If it isn't challenged, it becomes enforceable and you can seize the debtor's assets.
For SMEs with several unpaid debts from the same debtor, a single application can cover all the invoices.
When to check the debtor's solvency before going ahead
There's no point spending on legal fees if the debtor is already insolvent. Before starting court proceedings, check:
– Up-to-date Chamber of Commerce extract: company status, registered office, any insolvency proceedings under way
– Protests: protested bills of exchange and cheques are signs of insolvency
– Insolvency proceedings: if the debtor is in a creditors' arrangement or bankruptcy, the rules change completely (you will need to file a proof of debt)
A specialist lawyer can carry out these checks before deciding on a strategy.
Money owed by the public administration?
If your debtor is a public body (local council, health authority, state body), the rules of Legislative Decree 231/2002 apply with some differences:
– Standard term: 30 days (extendable to 60 days by agreement or for health authorities)
– Enforcement against the public administration is subject to specific limitations
– There are alternative tools such as the non-recourse assignment of the debt to banks or factoring companies
Debt recovery and debt purchase platforms: when to consider them
Some platforms buy the unpaid debt at a reduced value (typically 30-70% of the face value), removing the risk of the debtor's insolvency. It only makes sense when:
– You have concluded that the debtor is unlikely to be able to pay
– The cost/benefit of legal action is not favourable
– You urgently need cash
For recoverable debts, the legal route (notice of default + payment order) almost always produces a better result.
How much does debt recovery cost an SME?
Costs vary depending on the amount and complexity, but here's a rough estimate:
→ Formal notice of default through a lawyer | €150-300 (often included in an initial consultation) |
→ Payment order | €800-1.500 lawyer's fee + out-of-pocket expenses |
NB. Legal costs are recoverable from the debtor if they do not challenge the order or, if they challenge it and pay a lawyer themselves, you win the case.
How Legaless can help
Legaless offers SMEs a fully digital debt recovery service: no face-to-face meetings unless you want them, a transparent quote before starting, and complete handling from the notice of default to the payment order.
Information provided by Legaless® — it does not replace legal advice. For an assessment of your specific case, speak to a lawyer from our Team.
