Learning to chase an unpaid invoice properly is not glamorous. It is, however, one of the most valuable skills in running a UK small business. The Federation of Small Businesses and GoCardless surveyed over 2,000 small business owners. They found that 63 per cent of them spend time chasing overdue payments. Researchers estimate the cost at up to £5,200 a year in lost time and resources. If you run on tight margins, that is not an abstract figure. It is a second job you never applied for. The vast majority of women-owned UK businesses are micro or small firms, as our facts on women in business show, which means late payment lands hardest on the founders with the least slack to absorb it.
Chasing a late payer does not have to feel adversarial or awkward if you follow a clear sequence. There is a recognised order to this process, recommended by the Small Business Commissioner. Sticking to it protects both your cash flow and your professional reputation. This guide walks through that ladder, stage by stage. It includes scripts, tone guidance, and the judgement calls you will need to make along the way.
Before You Chase an Unpaid Invoice: Check for Errors First
Before you chase an unpaid invoice, check your own paperwork. A surprising number of late payments are not really late payments at all. They are disputes waiting to happen, caused by an invoice that was wrong in the first place. Go back to the original invoice and confirm the following:
- The correct invoice number
- The agreed amount
- The due date, calculated from your stated payment terms
- The client’s correct name and billing address
- Whether a purchase order number was required and included
You may have sent the invoice to the wrong contact or used the wrong VAT treatment. Perhaps you left off a PO number the client’s finance system needs to process payment. If so, the delay is on you, not them. Fixing it quietly and resending is far more professional than firing off a stern reminder for a mistake you made. Our guide on how to write an invoice correctly covers the details that most commonly trip people up. These include VAT lines, payment terms wording, and bank details formatting.
Only once you have confirmed the invoice itself is correct should you move to the next stage. This single check saves a lot of wasted energy. It also keeps your tone calm and factual, rather than defensive, if the client does come back with a query.
The Escalation Ladder, Step by Step
The Small Business Commissioner recommends a clear sequence for chasing payment, so you can escalate without burning bridges too early. It runs roughly like this: check the invoice, send a polite reminder, contact the client directly, resend the invoice, mention statutory interest, offer a payment plan if genuinely needed, then escalate to a formal letter. Each stage has its own tone.
Stage One: The Day-After Reminder
Send this the day after the due date passes, not weeks later. Keep it short, friendly, and assume good faith; most late payments are oversight, not refusal.
Example wording: “Hi [Name], just a quick note to flag that invoice #[number] for £[amount], due on [date], appears to still be outstanding. I know these things slip through, so I’m attaching a copy in case it helps. Let me know if there’s anything you need from me to process it.”
This stage should feel like a nudge between colleagues, not a warning shot.
Stage Two: The Firmer Reminder With a Dispute Window
If a week to ten days pass with no response, send a second message. The tone shifts slightly, from assuming oversight to requesting action. Give the client a specific window to raise any dispute.
Example wording: “Hi [Name], I haven’t had a response to my note about invoice #[number], now [X] days overdue. If there’s a problem with the invoice or the work, please let me know by [date] so we can sort it. Otherwise I’d appreciate payment by then.”
This stage protects you if the matter ever escalates. It shows you gave the client a fair, documented chance to raise a genuine dispute before things moved further.
Stage Three: The Phone Call
Email is easy to ignore; a phone call is much harder to dodge. Call the client directly, ask for the person who approves payments by name, and keep the conversation businesslike and brief. State the invoice number, the amount, and how overdue it is, then ask a direct question: “Can you tell me when I can expect this to be paid?” Resist the urge to apologise for chasing. You are owed the money for work you have already delivered.
Immediately after the call, write down the date, time, who you spoke to, and what you agreed. This note becomes important evidence later if the client never settles the debt.
Stage Four: Resend the Invoice and Mention Statutory Interest
Sometimes an invoice really has gone missing in someone’s inbox or after a finance system change. Resend it clearly, referencing the original invoice number so there is no confusion about duplicate billing. At this point, it is also reasonable to mention statutory interest, briefly. UK law gives you the right to charge interest and compensation on late commercial payments. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can claim statutory interest. This runs at 8 per cent plus the Bank of England base rate. You can also claim fixed compensation of between £40 and £100 per invoice, depending on the size of the debt. You do not need to go into detail here. A short line such as “as you may be aware, I’m entitled to add statutory interest to overdue invoices” is often enough to prompt action.
Offering a Documented Payment Plan When a Client Is Struggling
Not every late payment is a refusal to pay. Sometimes a decent client is going through a genuinely difficult patch. When the late payer is someone you have worked with for years, it is worth distinguishing between a client avoiding you and one who is embarrassed and struggling.
If the client is upfront about cash flow difficulty, offering a documented payment plan can preserve the relationship and still get you paid. Put it in writing: the total owed, the instalment amounts, the dates each instalment is due, and what happens if a payment is missed. Keep it simple: two or three paragraphs. Get written agreement, by email or a signed document, before the first instalment is due. This is not generosity for its own sake. It is a commercial decision to accept slower payment over no payment. The paper trail still counts if things go wrong later.
When to Pause Work Without Losing the Relationship
You may still be delivering ongoing work for a client who owes you money on a previous invoice. In that case, you need a clear line for when to pause further work. A reasonable rule: stop new deliverables once an invoice is 30 days overdue and two reminders have gone unanswered. The exception is a payment plan that the client is honouring.
Communicate this clearly and professionally rather than simply going quiet: “I’m going to pause work on [project] until invoice #[number] is settled. Happy to pick things back up as soon as that’s sorted.” This protects you from compounding the debt and signals, without aggression, that payment and delivery are linked. It is one of the few genuinely effective levers you have before legal routes, and it usually costs the client more than it costs you: they lose delivery, while you stop adding to a bill that is already unpaid.
The Letter Before Action: What It Must Contain
Reminders and calls may come to nothing, even after a reasonable period. When there is still no payment and no agreed plan, the next formal step is a letter before action. This is not a threat. It is a structured, documented final step that most courts expect to see before any claim is issued.
A proper letter before action should set out:
- The names and addresses of both parties
- The invoice number and date
- The amount owed and what it relates to
- Reference to the contract, quote, or purchase order that created the obligation
- A summary of the evidence held, such as signed agreements or delivery confirmation
- Any interest and costs being claimed
- A final deadline for payment or response
One detail worth getting right before you send it: if you trade through a limited company, the creditor is the company, so the letter goes out in the company’s name. If you are a sole trader, you claim in your own name. That legal separation matters well beyond tax.
There is an important distinction here depending on who owes you the money. For business-to-business debts owed by a limited company, there is no mandatory pre-action protocol. Even so, giving 14 days to respond before issuing court proceedings is standard good practice. It also strengthens your position if the matter reaches a judge. If the debtor is an individual, including a sole trader, different rules apply. Under the Pre-Action Protocol for Debt Claims, you must give the debtor 30 days to respond. You must also provide prescribed information about the debt. Getting this distinction right matters, because using the wrong process can delay a later court claim.
You do not need to pay a fortune for this letter. FSB members can access legal templates and fixed-fee debt recovery support through its legal services. Many solicitors will also draft a pre-action letter for a modest fixed fee agreed in advance. If the debt remains unpaid after the deadline in your letter, the small claims track becomes the next consideration. Limits are £10,000 in England and Wales, £5,000 in Scotland, and £3,000 in Northern Ireland. The GOV.UK guide to making a court claim for money covers that route in full, including current court fees.
Bringing in a Debt Collection Agency
For older or larger debts, or when you no longer have the time or appetite to keep chasing, a debt collection agency can take over the process. Agencies usually charge commission on commercial debts as a percentage of the amount recovered. The rate varies with the size and age of the debt. Some agencies also charge a subscription or administration fee regardless of outcome, so ask for the full fee structure in writing before you commit.
Before instructing an agency, check it is registered with the Credit Services Association, the industry body that sets standards for lawful, professional debt recovery conduct. This is not a box-ticking exercise: as the instructing client, you can be held liable if the agency uses unlawful methods such as harassment or misleading threats. Ask how they communicate with debtors. Ask about their success rate on debts similar in size and age to yours. And ask whether they charge their fee on recovery only or regardless of outcome.
Record-Keeping and the Judgement Calls That Matter
If there is one discipline that separates a smooth escalation from a messy one, it is record-keeping. Every time you chase an unpaid invoice, whether by email, phone, or letter, keep a dated log. Record what you sent, what was said, who you spoke to, and what you agreed. If the matter ever reaches a letter before action or a small claims hearing, this log becomes your evidence. Courts favour parties who can show a clear, reasonable, well-documented attempt to resolve things before litigation.
Alongside process, there is judgement. Not every overdue invoice deserves the same response speed or tone. A long-standing client who has always paid on time may be five days late because of a staffing gap. That client deserves patience and a human conversation. A new client who has gone silent after delivery, ignored two reminders, and dodged your calls is a different situation entirely. That relationship is effectively already over. Your energy is better spent protecting your cash flow than preserving goodwill the client is not returning.
A useful test: would you willingly take on new work from this client again, on these terms, right now? If the honest answer is no, stop treating the chase gently and move through the escalation ladder at a brisk, professional pace. Chasing an unpaid invoice is not personal, even when it feels that way after the third ignored email. It is simply the final stage of delivering the work you were contracted to do.
If invoicing errors keep causing late payment headaches, our guide on writing a correct first invoice is worth reading alongside this one. For the wider pressure that unpaid work can put on your finances, see our piece on financial anxiety among self-employed women, and if cash flow gaps from late payers are becoming a pattern, our overview of cash flow loans for UK founders covers short-term options worth considering.
