Corporate debt recovery in Nigeria is a critical issue for companies engaged in import/export, wholesale distribution and FMCG trade. Long payment cycles, foreign exchange constraints and regulatory complexity can all increase the risk of unpaid invoices. For businesses trading into or within Nigeria, understanding how corporate debt recovery works – and how to prevent problems in the first place – is essential for protecting margins and cash flow.

Understanding Corporate Debt Recovery in Nigeria

Corporate debt recovery in Nigeria covers all the processes a business uses to collect money owed by other companies – from informal reminders and negotiation through to legal action in court. For firms supplying goods across borders or on credit, such as importers, exporters and wholesale distributors, overdue payments can quickly escalate into serious cash-flow challenges.

In Nigeria, many B2B transactions rely on credit terms, post-dated cheques or part-payments. While this can help close deals, it also exposes suppliers to default risk. Having clear internal policies, documented contracts and a structured recovery strategy is therefore vital for any organisation trading at scale.

Key Legal and Commercial Tools for Corporate Debt Recovery in Nigeria

Effective corporate debt recovery in Nigeria usually combines commercial pressure with legal options. The main tools include:

• Formal demand letters: A written demand, sent by the creditor or its legal representative, sets out the outstanding amount, contract basis and deadline for payment. It often triggers settlement without court action.

• Negotiation and restructuring: In some cases, rescheduling payment, offering a short-term discount or agreeing instalments can be more efficient than litigation, especially when the debtor is a long-term customer.

• Use of security and guarantees: Personal guarantees, bank guarantees, liens over goods and retention-of-title clauses (where legally enforceable) all strengthen the creditor’s position before any dispute arises.

• Court action and enforcement: Where negotiation fails, companies may proceed to court to obtain judgment and then enforce against the debtor’s assets, bank accounts or receivables, in line with Nigerian law and procedure.

Working with partners familiar with Nigerian commercial practice – including experienced logistics providers and trading specialists – helps ensure that contracts, invoices and delivery records support any future recovery effort.

Common Challenges in Corporate Debt Recovery in Nigeria

Corporate debt recovery in Nigeria can be slowed or complicated by several structural and operational issues:

• Documentation gaps: Missing purchase orders, unsigned delivery notes or inconsistent invoices weaken a creditor’s case. For cross-border shipments, incomplete shipping and customs paperwork can be an additional problem.

• Disputes over quality or delivery: Buyers may withhold payment citing product quality, delivery delays or quantity discrepancies. These disputes can arise more frequently in fast-moving FMCG and bulk commodity trades.

• Currency and liquidity constraints: Limited foreign exchange availability and fluctuating naira liquidity can affect a debtor’s ability to pay, even where they acknowledge the debt.

• Time and cost of legal proceedings: While court action is sometimes necessary, it can be time-consuming. Many companies therefore try to resolve matters commercially before litigation.

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These challenges highlight the value of prevention: robust vetting of customers, risk-based credit limits, secure payment methods and strong operational controls.

Practical Strategies to Improve Corporate Debt Recovery in Nigeria

Businesses can significantly improve corporate debt recovery in Nigeria by embedding clear policies and disciplined processes across their supply chain and finance operations:

1. Strengthen credit management before you sell

   • Conduct basic due diligence on new buyers, including company information and trade references.

   • Set credit limits based on order size, sector, and payment history.

   • Use letters of credit, advance payments or secure collection methods for higher-risk or new customers.

2. Improve contract and documentation quality

   • Use written contracts that clearly define payment terms, Incoterms, delivery conditions and dispute-resolution mechanisms.

   • Ensure all deliveries have proof of shipment and proof of receipt.

   • Align commercial invoices, packing lists and waybills to avoid later disputes.

3. Implement structured collection procedures

   • Set up an internal timetable for reminders: friendly follow-ups shortly after due date, followed by formal notices if payment is not received.

   • Escalate older debts to specialist recovery partners or legal advisers who understand Nigerian corporate practices.

   • Keep detailed records of all communication and settlement offers.

4. Use experienced trade and logistics partners

   • Partnering with an established trading and logistics firm can reduce operational disputes that often lead to non-payment.

   • Reliable warehousing, transport and documentation support lower the risk of claims around shortages or damaged goods.

Wigmore Trading, for example, supports clients across Africa with sourcing, bulk distribution and cross-border logistics. By ensuring shipments are properly documented, routed and delivered, and by understanding local trading norms, such partners help minimise disagreements that can evolve into bad debts.

How Wigmore Trading Supports Corporate Debt Recovery in Nigeria

While Wigmore Trading is not a law firm, its role in import, export, wholesale distribution and FMCG logistics positions it to support better corporate debt recovery in Nigeria in several practical ways:

• Risk-aware sourcing and distribution: Helping clients design supply routes and delivery terms that reduce exposure to non-payment and operational disputes.

• Robust documentation and traceability: Ensuring that purchase orders, delivery notes, waybills and inventory records are accurate and aligned, strengthening any future recovery claim.

• Local market insight: Providing insight into buyer profiles, payment behaviour and sector-specific risks across Nigerian and regional markets.

• Supply chain visibility: Offering clear tracking and reporting so that any issues affecting delivery – and therefore payment – are quickly identified and addressed.

By combining strong internal credit policies with experienced trade partners, companies can reduce the volume of overdue accounts and improve their chances of recovery when debts arise.

Conclusion: Making Corporate Debt Recovery in Nigeria More Predictable

Corporate debt recovery in Nigeria does not have to be an unpredictable, last-minute scramble. With clear contracts, disciplined credit management, reliable logistics and the right local partners, businesses can protect their cash flow and reduce write-offs. For importers, exporters and wholesale distributors working with Nigerian customers, proactive risk management is often more effective – and less costly – than relying on legal action alone.

Contact Wigmore Trading today to streamline your sourcing and reduce the risk of bad debt in your Nigerian operations.