How to chase
an unpaid invoice

Most late invoices are not refused; they are forgotten, lost or stuck behind a query nobody told you about. A calm, regular sequence of reminders fixes the majority. The steps below escalate gently, and each one gives the customer a clear, easy way to pay.

Before the due date

A short reminder three to five days before the due date prevents many late payments: "Just a reminder that invoice INV-0042 for £390.00 is due on 28 March. The invoice is attached again for convenience." It catches a lost invoice while there is still time to pay on time.

Day 1 after the due date: a friendly reminder

Email the person who pays invoices, copying your usual contact. Attach the invoice again, state the amount and the due date, and ask whether there is anything preventing payment. Keep it neutral; you want an answer, not an argument.

Day 7: a phone call

If nothing has arrived, phone. Ask whether the invoice has been received, whether it has been approved, and when it is scheduled for payment. Then confirm what you were told in an email. A phone call often reveals the real problem: a missing purchase order, a wrong address, or an approver on holiday.

Day 14: a firm reminder

Send a firmer email or letter. State the invoice number, amount and how late it is, and ask for payment by a specific date, usually seven days away. If the customer is a business, say that you will add statutory interest and fixed compensation if the invoice is not paid by then. A statement of account listing everything outstanding can help if more than one invoice is late.

Day 30: add interest and compensation

For a business customer, you can now claim statutory interest at 8% over the Bank of England base rate and fixed compensation, unless your contract sets its own rate. The late payment interest calculator works out both. Send a new invoice for them, showing how you calculated the figures. The guide on charging interest on late payments covers the rules.

Day 45 onwards: a letter before action

If the debt is still unpaid, send a letter before action: a formal letter setting out what is owed, why, and what you will do if it is not paid. If your customer is an individual, including a sole trader, the Pre-Action Protocol for Debt Claims applies, and you must give them 30 days to reply before starting court proceedings. For a company, the general pre-action rules expect a letter setting out the claim and a reasonable time to respond, usually 14 days in a straightforward case.

The last step: a court claim

If the letter is ignored, you can make a court claim for money. In England and Wales, claims of up to £10,000 are normally dealt with as small claims, and you can apply online. The guide on small claims for an unpaid invoice walks through fees and the process.

If the customer disputes the invoice

A dispute changes the conversation. Ask exactly what is disputed, pay attention to anything that is fair, and invoice or credit accordingly; the undisputed part is still due. The guide on invoice disputes sets out how to resolve one.

If the customer cannot pay

A business in difficulty may offer to pay in instalments. Agreeing a plan in writing, with dates, often recovers more than a court claim would. Keep invoicing for new work only on shorter terms or upfront until the debt is cleared.

Keep a record of every step

Log each reminder, call and reply with the date. If the debt ever reaches court, that record shows you acted reasonably, which is exactly what the pre-action rules ask for.

The chasing timeline at a glance

What to say at each stage

The words matter less than being clear, prompt and consistent. These outlines work.

First reminder. "Invoice INV-0042 for £390.00 was due on 28 March and I have not yet received payment. I have attached it again in case it went astray. Could you let me know when it is scheduled for payment?"

After the call. "Thanks for your time today. As agreed, invoice INV-0042 for £390.00 will be paid in your run on 12 April."

Firm reminder. "Invoice INV-0042 for £390.00 is now 14 days overdue. Please pay it by 19 April. If it remains unpaid after that date I will add statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998."

Interest invoice. A new invoice for the statutory interest and compensation, showing the original invoice, the days late, the rate and the daily figure, worked out with the late payment interest calculator.

Letter before action: what to include

A letter before action should state who you are and who owes you, what the debt is for, the invoice numbers, dates and amounts, the interest and compensation claimed and how you calculated them, the date by which you require payment, and that you will start court proceedings without further notice if you are not paid. Attach copies of the invoices.

If the customer is an individual, including a sole trader, follow the Pre-Action Protocol for Debt Claims: it sets out what the letter must contain and the forms to include, and requires you to allow 30 days for a reply. For a company, a reasonable period, usually 14 days in a straightforward case, is expected. The guide on small claims for an unpaid invoice covers the claim itself.

Diagnosing why an invoice is unpaid

Keeping relationships intact

Chasing does not have to damage a relationship. Keep every message factual and polite, even at the formal stages. Separate the person you work with from the process that pays you; often your contact is as frustrated as you are. And be consistent: a customer who learns that you chase on day one pays on time far more often than one who learns you will wait.

Preventing the next late payment

Once a customer has paid late, change something before the next job. Shorten the terms, ask for a deposit, invoice in smaller stages, or confirm the purchase order and approver before starting. The guide on invoice payment terms sets out options, and 30 day payment terms covers the most common term in depth.

Your records while chasing

Log each step with the date: reminders sent, calls made, promises given. If the debt reaches court, that log shows you acted reasonably. For your tax, an unpaid invoice is not income under the cash basis until it is paid; under accruals it is income already, and if it proves irrecoverable you may be able to treat it as a bad debt. If you are VAT registered, VAT bad debt relief can return the VAT you paid to HMRC on an invoice that has stayed unpaid for 6 months after the later of the due date and the date of supply, once you have written it off in your VAT accounts; it must be claimed within 4 years and 6 months.

Common questions

Can I stop work until I am paid? Only if your contract allows it; construction contracts often have specific rules. Otherwise, you can decline new work until the debt is cleared.

Should I use a debt collection agency? For larger debts or persistent non-payers, an agency can help, usually for a percentage of what they recover. The fixed compensation under the Late Payment Act, and reasonable recovery costs beyond it, can contribute towards those costs for business debts.

Can I publish that a customer has not paid? No. Naming a debtor publicly risks a defamation claim and can breach data protection law. Keep chasing private.

The whole method fits in one sentence: chase early, chase in writing, chase on a schedule, and escalate calmly when the schedule says so.