Some would argue that bad debts are a way of life for small business, and simply write them off. Others fight back: they use the small claims service of the county courts, which is designed to provide an easy, speedy and low cost means of resolving disputes. As a cheap, quick and trouble-free method of recovering the money owed to you.

Around 2 million small claims are made each year, and only a tiny proportion of those claims ever come to court – in many cases the threat of small claims does the trick, and payment follows quickly. The small claims system works very well for most people, and is ideal for small businesses. However, there is always a risk and people should take out a small claim recognising that they won't necessarily get the money.

But for most small businesses, small claims is a useful last resort – a relatively quick, cheap and easy way to recover the money owed to you from a client who ignores or evades all other attempts to make him cough up. Also any costs you incur can be added to the unpaid bill and paid by your creditor if you win. But remember that you will get nothing if your client does not have the money, or assets of value. If your client is a limited company, there may not be assets in the company's own name and so you cannot enforce payment.

Even worse, you could find yourself in a great queue of creditors, none of whom are likely to be paid. If your client already has other county court judgements against him, which he has not paid, chances are he won't pay you either.

Things to do before you make a claim

Remind customers of unpaid debts with an invoice, and a monthly statement of how much they owe you. Act quickly: the longer debts go unpaid, the less likely they are ever to be paid. Write to your customer requesting payment by a certain date, and saying you will undertake county court proceedings if payment is not made. Keep copies of all correspondence – you will need to show the courts that you tried all other means, and used small claims only as a last resort.