How to Chase Unpaid Invoices: A Professional Guide for UK Businesses

Chasing unpaid invoices is one of the most frustrating parts of running a business. According to the Federation of Small Businesses, late payments affect around 50,000 UK businesses each year, with many forced to close due to the resulting cash flow problems. The good news is that UK law is firmly on your side, and with the right approach you can recover what you're owed while keeping the relationship professional.

This guide walks you through exactly how to chase unpaid invoices — from polite reminders to legal action — with email templates, escalation timelines, and strategies to prevent late payments in the first place.

Before You Start: Set Yourself Up for Success

Before you send that first chaser email, make sure your original invoice was clear and professional. A surprising number of payment delays happen simply because the invoice was unclear, sent to the wrong person, or lacked essential details. Before chasing, verify:

• The invoice was sent to the correct email address and contact person
• The payment terms were clearly stated (e.g., “Net 30”)
• Your bank details or payment instructions were included
• The invoice number, date, and amount are all correct
• The work or goods described match what was agreed

If any of these are missing or wrong, fix the invoice first. You'll save yourself the awkwardness of chasing a payment that was delayed because of your own error.

The Escalation Timeline: From Friendly to Formal

The key to successful debt recovery is a structured, escalating approach. Start friendly and become progressively firmer. Here's the timeline that works for most UK businesses:

Day 1 — Payment Due Date

On the day payment is due, it's perfectly reasonable to send a brief, friendly reminder. Many businesses do this automatically. It's not aggressive — it's professional.

Day 7 — First Follow-Up

If a week has passed with no payment or acknowledgement, send a slightly firmer follow-up. At this stage, assume it's an oversight rather than deliberate non-payment.

Day 14 — Formal Reminder

Two weeks overdue is the point where your tone should become more direct. Reference the payment terms and mention that continued non-payment will result in late payment interest. This is not a threat — it's informing the debtor of their legal obligations.

Day 30 — Letter Before Action

If the invoice remains unpaid after 30 days, it's time for a “letter before action” (also called a letter before claim). This is a formal legal document that puts the debtor on notice that you intend to pursue the debt through the courts. Under the Civil Procedure Rules Pre-Action Protocol, you should give the debtor 14 days to respond before filing a claim.

Send this letter by email and by post (ideally recorded delivery) to ensure there's no dispute about whether it was received.

Day 60+ — Legal Action

If the letter before action produces no response, you have several options for recovering the debt.

Your Legal Rights: The Late Payment of Commercial Debts Act

UK businesses have strong legal protection against late payers through the Late Payment of Commercial Debts (Interest) Act 1998. This applies to all B2B transactions and gives you the automatic right to:

• Statutory interest: 8% per year above the Bank of England base rate. This accrues daily from the day after the payment due date.
• Fixed compensation: £40 for debts up to £999.99, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more. This is per invoice, not per debtor.
• Reasonable recovery costs: If your actual costs of recovering the debt exceed the fixed compensation amount, you can claim the difference.

These rights apply even if your contract or invoice doesn't mention late payment penalties. They are statutory rights that cannot be excluded by an unfair contract term.

Small Claims Court (Money Claims Online)

For debts up to £10,000 in England and Wales, you can file a claim through Money Claims Online (MCOL), the government's online portal for small claims. The process is straightforward:

1. Register at the Money Claims Online website (moneyclaims.service.gov.uk).
2. Submit your claim with details of the debt, including the original invoice, evidence of your chasing efforts, and the statutory interest and compensation you're claiming.
3. Pay the court fee — this ranges from £35 for claims up to £300, to £455 for claims between £5,001 and £10,000. You can add the court fee to your claim.
4. The debtor has 14 days to respond. They can pay, dispute the claim, or ignore it.
5. If they don't respond, you can request a default County Court Judgment (CCJ). A CCJ stays on the debtor's credit file for 6 years and is a serious mark against their business.
6. If they dispute, the case goes to a small claims hearing (usually informal, held in a judge's chambers). For straightforward invoice disputes, these tend to be resolved quickly.

For debts over £10,000, you'll need to file through the County Court, which is a more formal process and may warrant instructing a solicitor.

Alternative Recovery Options

If the small claims court route doesn't suit your situation, there are other avenues:

• Debt collection agencies: These typically charge 10-15% of the recovered amount. They handle all the chasing for you and are effective because debtors take them seriously. Only use reputable agencies that are members of the Credit Services Association (CSA).
• Mediation: For disputes where the relationship matters, mediation through a service like the Small Business Commissioner can help. This is free and can be surprisingly effective.
• Statutory demand: For debts over £750, you can serve a statutory demand. If the debtor fails to pay within 21 days, this can be the basis for winding-up proceedings (forcing insolvency). This is a powerful tool, but use it carefully — it's only appropriate when the debt is undisputed.

Phone Calls vs Emails: Which Is Better?

For the first couple of chasers, email is fine. It's non-confrontational, creates a paper trail, and gives the debtor time to respond without feeling ambushed. However, if emails aren't getting a response, pick up the phone.

A phone call is much harder to ignore than an email. Keep the call professional and focused:

• State the invoice number, amount, and how overdue it is
• Ask when payment will be made and get a specific date
• If they cite a problem, ask what you can do to help resolve it
• Follow up the call with an email summarising what was agreed

The combination of written and verbal communication is the most effective approach. Always follow up verbal agreements in writing so there's no room for “I don't remember saying that.”

How to Prevent Late Payments in the First Place

The best debt recovery strategy is not needing one. Here are proven tactics to reduce late payments before they happen:

• Send invoices immediately: The sooner you invoice, the sooner the payment clock starts. Don't wait until the end of the month if the work was completed on the 5th.
• Use clear, professional invoices: A well-formatted invoice with all the required details signals that you're organised and serious about getting paid. Sloppy invoices get deprioritised.
• State payment terms explicitly: “Net 30” on the invoice is not enough if it wasn't agreed in advance. Include payment terms in your contract or proposal and reiterate them on the invoice.
• Include late payment penalties on the invoice: A line stating “Late payments are subject to statutory interest at 8% above the Bank of England base rate” acts as a deterrent, even if you never enforce it.
• Request deposits for new clients: Asking for 25-50% upfront for new clients or large projects is standard practice and reduces your exposure.
• Offer multiple payment methods: Make it as easy as possible for the client to pay. Include bank transfer details, and consider accepting card payments.
• Use shorter payment terms: “Due on Receipt” or “Net 14” is perfectly reasonable for small businesses and freelancers. The 30-day convention was designed for large corporates, not sole traders who need cash flow.
• Credit-check new clients: For large contracts, a basic credit check through Companies House or a credit reference agency can flag clients who have a history of paying late.

What Not to Do When Chasing Payment

When you're owed money and being ignored, it's easy to let frustration take over. Avoid these common mistakes:

• Don't be aggressive or threatening: Keep every communication professional and factual. Anger and threats are counterproductive and could backfire if the case goes to court.
• Don't stop providing services abruptly without notice if you have an ongoing contract. Check your contract terms first, as stopping work without proper notice could put you in breach.
• Don't publicly shame the debtor: Posting about non-paying clients on social media can expose you to defamation claims, even if what you're saying is true.
• Don't give up too easily: Many businesses write off small debts because chasing them feels like more trouble than it's worth. But consistent non-enforcement teaches clients that your terms are negotiable.
• Don't forget to keep records: Save every email, note every phone call, and keep copies of all invoices and reminders. If the matter goes to court, your paper trail is your evidence.

A Quick Summary: Your Chasing Timeline