Every business owner in Nigeria has one of these stories. You supplied the goods, you did the job, the invoice went out and then the client went quiet. Not “we have a problem” quiet. Just… quiet. Calls that ring out. WhatsApp messages left on “delivered” for weeks. A promise to “sort it out by Friday” that’s now three Fridays old.
Your first instinct is probably to march to court. Your second instinct, if you’ve ever actually been to a Nigerian court, is to sit back down and think of something else. Litigation is slow, it’s not cheap, and worst of all, it can quietly kill a business relationship you might still need someday. That client who owes you ₦800,000 today might be your biggest customer again in two years, assuming you both survive this.
The good news is that going to court is not actually your second step. It’s usually your fourth or fifth. Here’s everything worth trying first and why each one exists, not just what it is.
Step One: Just Talk to Them (Seriously)
This sounds almost too obvious to write down, and yet it’s the step most SMEs skip in their hurt and frustration. Before you involve a single lawyer, pick up the phone. Not to threaten, but to talk like someone who understands.
Sometimes a debtor genuinely isn’t dodging you; they’re drowning. Maybe their own customers haven’t paid them. Maybe there’s a cash flow crunch you don’t know about. A direct, calm conversation often surfaces this, and it opens the door to options a court will never give you:
- A payment plan: smaller amounts over a fixed schedule, which is often more realistic than one lump sum they clearly don’t have.
- A partial settlement: accepting 70% now rather than gambling on 100% eventually, especially if the alternative is chasing a company that might not exist in six months.
- Restructured terms: extending the timeline in exchange for something, like a personal guarantee from a director, or collateral you didn’t originally ask for.
Whatever you agree, get it in writing; an email confirming the new terms is enough. Handshake agreements are exactly how “I thought we agreed to…” disputes are born.
Step Two: Send the Letter That Actually Means Something
If the friendly conversation goes nowhere, it’s time for a Demand Letter, sometimes called a pre-action notice. This isn’t just an angrier version of the WhatsApp messages you’ve already sent. It’s a formal, dated, professionally worded document, usually from your lawyer, that does three things: states exactly what’s owed, gives a clear deadline to pay, and puts the debtor on notice that legal action follows if they miss it.
Here’s what a lot of business owners don’t realize: in commercial hubs like Lagos and Abuja, courts increasingly expect to see evidence that you actually tried to resolve things amicably, including issuing a demand letter, before they’ll entertain your case at all. Skip this step, and you’re not just being impatient; you may actually be jeopardizing your own case later.
A good demand letter is calm, not aggressive. Threats and insults in a demand letter read as unprofessional and can even work against you if the matter ends up before a judge who reads it later. State the facts, state the amount, state the deadline. Let the seriousness come from the clarity, not the tone.
Step Three: Consider Mediation Before You Consider a Courtroom
Nigeria has a genuinely functional alternative dispute resolution infrastructure, and the Lagos Multi-Door Courthouse is the best-known example. Courts in commercial centres now often screen cases through mediation before allowing them to proceed to full trial, which means you may end up here regardless, so you might as well use it proactively rather than being pushed into it later.
Mediation is faster, considerably cheaper, and this matters more than people admit. Your dispute with a client doesn’t become public courtroom drama that other customers or partners can hear about. If there’s any chance you’ll do business with this debtor again, or if reputation in your industry matters (and in most SME circles, it always does), this is worth trying before you burn the relationship completely.
Step Four: Know Your Small Claims Court Option
If negotiation and mediation both fail and the amount owed isn’t enormous, Small Claims Courts exist specifically for situations like yours. They were designed with SMEs in mind, quicker timelines, simplified procedure, and none of the drawn-out formality of a full High Court trial. The exact claim ceiling varies by state (commonly in the ₦5 million range, though this differs across jurisdictions), so it’s worth checking your specific state’s threshold before assuming this route applies to your debt.
This is often the sweet spot for SME debt recovery: serious enough to compel a genuinely reluctant debtor to respond, without the cost and delay of a full commercial suit.
Step Five: The “Undefended List” — Litigation’s Fast Lane
If you do end up in court, there’s one option worth knowing about before you brace for years of proceedings: the Undefended List / Summary Judgment procedure. Where the debt is clear-cut, an invoice, a signed acknowledgment, no genuine dispute about the amount and the debtor has no credible defence, this procedure allows the court to enter judgment quickly, skipping the long, drawn-out trial process entirely. It exists precisely for situations like an SME chasing an unpaid invoice where the debtor is simply avoiding payment rather than actually disputing owing it.
This is one of the strongest arguments for documenting everything properly from the start of the business relationship; signed contracts, acknowledged invoices, written confirmations of delivery. The cleaner your paper trail, the more likely your case qualifies for this faster track if it ever gets that far.
A Quiet Warning About the Clock
There’s a detail that quietly ends more valid debt claims than most people realize: the statute of limitations. For most ordinary commercial debts, you generally have six years from the date the debt became due to bring a claim; after that, however genuine your case, a court can dismiss it as “statute-barred.” It sounds like a long runway until you remember how easily “I’ll deal with it eventually” turns into three, then five, then seven years. Don’t let patience with a debtor become an accidental forfeiture of your own right to be paid.
Practitioner’s Notes From the Real World
A few things worth knowing that don’t show up in the standard advice:
- A dishonoured cheque is a different animal entirely. If the debt is backed by a cheque that bounced, that’s not just a civil debt issue anymore; issuing a cheque that’s dishonoured for insufficient funds can itself carry criminal exposure under Nigerian law. This sometimes moves a stubborn debtor to settle far faster than a civil claim alone would, because a criminal complaint gets attention in a way a lawyer’s letter sometimes doesn’t.
- Document the relationship as you go, not after it sours. The SMEs who recover debts fastest are rarely the ones with the best lawyers; they’re the ones who had a signed contract, a clear invoice trail, and written confirmation of delivery from day one. All the fast-track options above depend on having a clean paper trail; none of them can rescue a deal that was always just a verbal understanding.
- Weigh the cost of chasing against the size of the debt. Not every unpaid invoice is worth a legal fight. Sometimes the most commercially sound decision is to write off a small debt, learn the lesson about vetting that particular client, and move on; chasing ₦150,000 through months of process can cost more in time and legal fees than it recovers.
When It’s Time to Bring in a Lawyer
If you’ve tried the direct approach and hit a wall, a lawyer’s real value isn’t just drafting a scarier letter; it’s telling you honestly which of these routes fits your specific situation, and whether the size of the debt actually justifies the cost of chasing it. Sometimes that conversation saves you more money than the case itself would have recovered.
This article is intended as general information on debt recovery options for SMEs in Nigeria and does not constitute legal advice for any specific matter. Court thresholds, procedures, and limitation periods can vary by state and change over time — always confirm the current position with a qualified legal practitioner before proceeding.