You finished the job in March. It is now May, the invoice is still showing as unpaid, and you have rewritten the same polite email four times. Chasing money owed to you is one of the least enjoyable parts of running a business, which is exactly why so many small firms put it off — and why the debt gets older and harder to collect. The good news is that UK law gives you clear tools, and a calm, staged approach works far better than either silence or a sudden angry email.
Here is how to chase overdue invoices properly: what to check first, what to write, when to escalate, and how to work out the statutory interest you are entitled to add.
Before you send anything, check the invoice
A fair share of "late payers" turn out to be lost-paperwork cases. Before you accuse anyone of withholding money, confirm that:
- the invoice carries the correct legal name and address of your customer, plus any purchase order number their system requires;
- it was sent to the right person — not just a generic accounts inbox nobody monitors;
- your payment terms are stated on the invoice itself, not only in a contract signed two years ago;
- the bank details are correct and the amount matches the quote or purchase order.
If any of that is wrong, the clock effectively resets. Fix it, resend, and note the date you did so.
The first reminder: polite, short, specific
Wait a day or two past the due date, then send something brief. Long emails get skimmed. Include the invoice number, the amount, the original due date and one clear request.
Subject: Invoice 1042 — £3,150 — now overdue
Hello Priya,
I hope all is well. Invoice 1042 for £3,150 was due on 14 April and I can't see a payment against it yet. I've attached a copy in case that helps. Could you let me know when it's scheduled, or flag anything that's holding it up?
Happy to jump on a call if that's easier.
Best wishes,
Tom
Notice the tone: no sarcasm, no "as you are well aware". Assume the best, but ask for a date. Vague replies such as "we'll look into it" are not dates — follow up and ask again.
Escalation, step by step
- Day 1 after the due date. Friendly email with a copy of the invoice attached.
- Day 7. Telephone the person who can actually authorise payment, then follow the call with an email confirming what was agreed.
- Day 14. Firmer email to the finance contact, copied to your main contact. State the amount, the number of days overdue, and that you will apply statutory interest and recovery costs if it remains unpaid.
- Day 21 to 30. Send a formal letter before action: a final deadline of seven days, the exact amount owed including interest calculated to that date, and a note that you will begin a court claim without further notice.
- After the deadline. Decide whether to claim. For straightforward sums within the small claims limits, the online Money Claim service in England and Wales is usually the quickest route; Scotland and Northern Ireland have their own procedures.
Keep every message in one folder with dates. If you do end up in court, a tidy paper trail does most of the persuading for you.
What the law lets you charge
Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses and public sector bodies that pay late can be charged statutory interest at 8% above the Bank of England base rate. It applies to most business-to-business contracts where both sides are acting in the course of business, and it accrues automatically — you do not need a clause in your contract to rely on it.
Interest normally runs from the day after the agreed payment date. If no payment date was agreed, it generally starts 30 days after the invoice was received, or after the goods or services were supplied.
Two points are worth knowing:
- If your contract already sets a rate of interest that amounts to a "substantial remedy", that contractual rate applies instead. A token 0.5% clause may not count — but check before assuming.
- Consumer debts fall outside the Act, so interest there depends on what you agreed with the customer.
You can also claim a fixed sum towards the cost of recovering the debt: £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 a statutory entitlement, not a fee you have to prove with receipts.
Working out the interest
The sum is simple once you have the daily rate:
Debt × (base rate + 8%) ÷ 365 × number of days late
Say you are owed £4,000 and the base rate is 4.75%, giving 12.75% a year. That is £510 a year, or roughly £1.40 a day. Sixty days late adds about £84. Add £70 in recovery costs and the claim becomes roughly £4,154.
Recalculate if the base rate changes, and quote the daily rate in your letters so the customer can see how the figure was built. Charge VAT on the invoice as normal — statutory interest and recovery costs are generally treated as outside the scope of VAT, but confirm the position with your accountant.
Make chasing routine, not dramatic
The businesses that get paid fastest are rarely the most aggressive. They are the most organised. Invoice the same day you deliver, put your terms on every invoice, and set reminders for day 1, 7 and 14 so nobody has to remember. Keep a simple aged debtors list and review anything over 30 days each week. Ring about the large ones rather than emailing. A debt that is a fortnight old is a quick conversation; a debt that is six months old is a problem.
One last thing: courts expect a reasonable attempt to resolve matters before a claim, and limitation periods apply — broadly six years in England, Wales and Northern Ireland, and five in Scotland. If the debt is large, disputed or tied up in a complicated contract, take advice from a solicitor or a qualified accountant before you issue anything.
Photo: JoshuaWoroniecki / Pixabay
