Debt Recovery in Kenya: A Guide for Commercial Creditors

Start with the documents

Before any contact with the debtor, assemble the evidence of the debt: the contract or purchase order, the invoices, proof of delivery or completion, the statement of account and all correspondence. A written acknowledgment of the debt by the debtor, such as an email confirming the balance or proposing a payment date, is particularly valuable.

It is equally important to confirm who the debtor is. A search at the Business Registration Service through eCitizen confirms a company's registered name, registration number and registered office, and ensures any demand is addressed to the correct legal entity rather than to a trading name.

The formal demand

A clear written demand states the amount due, the basis of the claim, the documents relied on and a reasonable deadline for payment. It gives the debtor a final opportunity to pay or to raise any dispute, and it creates a record that will matter if the claim later proceeds.

Where legal consequences are to be stated in the demand, the letter is issued by an advocate. Eastbridge Recoveries refers such matters to partner advocates, who act under their own engagement with the creditor.

Negotiation and payment plans

Many Kenyan businesses that fall behind on supplier payments are experiencing cash-flow pressure rather than disputing the debt. A structured payment plan, with a deposit, defined instalments and a default clause, often recovers more, and sooner, than immediate litigation.

Every instalment should be tracked against the agreed schedule. A missed payment is a signal to review the file promptly, not to wait.

When proceedings are needed

If the debtor neither pays nor raises a genuine dispute, the claim may proceed to court or, where the contract provides for it, to arbitration. For a liquidated debt, Order 36 of the Civil Procedure Rules, 2010 allows a plaintiff to apply for summary judgment where the defendant has appeared but not filed a defence.

Where the debtor is a company, the Insolvency Act, 2015 also provides a route: under section 384(1)(a), a company is deemed unable to pay its debts if it fails, for twenty-one days, to pay a debt of one hundred thousand shillings or more after a written demand is left at its registered office. This is a serious step and is taken only on legal advice.

Time limits

Under section 4(1)(a) of the Limitation of Actions Act, an action founded on contract may not be brought after six years from the date on which the cause of action accrued. Section 23(3) provides that where the debtor acknowledges the claim or makes a payment, the right of action accrues afresh from that date, and section 24 requires the acknowledgment to be in writing and signed. Older claims should be reviewed for limitation before any other step is taken.

Frequently asked questions