How to Chase a Late Invoice (UK Guide) | WDI Billing

How to Chase a Late Invoice: A Step-by-Step UK Guide

Every UK sole trader and small business owner knows the feeling: you did the work, you sent the invoice, and the payment date has come and gone. Knowing how to chase a late invoice - firmly, professionally, and without damaging the relationship - is one of the most useful skills a small business owner can have. This guide walks through the legal position on late payment, a proven escalation process, a letter before action template, and how the right invoicing software can stop the problem happening in the first place.

Why Late Payment Happens - and Why You're Entitled to Chase It

Late payment isn't just an inconvenience; for small businesses it's a genuine cash flow risk. The good news is that UK law is firmly on your side. Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses have a statutory right to claim interest on overdue invoices, set at 8% per year over the Bank of England base rate in force on the relevant date - a combined rate that moves automatically with the base rate and currently sits at around 11.75% for business-to-business transactions. You're also entitled to claim fixed statutory compensation for the cost of recovering the debt: £40 for debts under £1,000, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more, with the option to claim any further reasonable recovery costs on top if they exceed this fixed amount .

You don't have to invoke these rights on every late invoice - most of the time a friendly nudge is all that's needed - but knowing they exist changes the tone of every conversation you have about unpaid invoices. You're not "being difficult" by chasing payment; you're exercising a right Parliament gave small businesses specifically because late payment is such a common problem.

Step 1: The Friendly Reminder (Day 1-7 Overdue)

Most late payments are simple oversights, not disputes. Start light:

  • Send a short, polite email reminding the client the invoice is now overdue, with the invoice number, amount, and original due date restated clearly.
  • Attach a fresh copy of the invoice - don't assume they can find the original.
  • Ask a simple, low-pressure question: "Could you let me know when this is likely to be settled?"

This is also where good invoicing software earns its keep. Automated payment reminders sent a few days before and after the due date catch a large share of late payments before you ever need to have an awkward conversation - see our invoicing software for UK businesses for how automatic reminders and payment tracking work in practice.

Step 2: The Firmer Follow-Up (Day 7-21 Overdue)

If the friendly reminder doesn't land a response within a week or so, it's time to be more direct:

  • Phone the client if you have a working relationship - a conversation often resolves things faster than another email.
  • Restate the payment terms from your original contract or invoice (e.g. "payment due within 30 days").
  • Mention, factually and without hostility, that statutory interest may begin to accrue on the overdue amount under the Late Payment of Commercial Debts (Interest) Act 1998 .
  • Set a clear new deadline - "please can you settle this by [date]" - so there's no ambiguity about what happens next.

Keep a written record of every contact at this stage. If the debt ever needs to go further, a documented chase history strengthens your position considerably.

Step 3: The Formal Letter Before Action

If payment still hasn't arrived after a firm follow-up, the next step is a formal letter before action (sometimes called a letter before claim). In England and Wales, this mirrors the approach set out in the Practice Direction on Pre-Action Conduct that governs company-to-company disputes (the specific Pre-Action Protocol for Debt Claims applies where the debtor is an individual or sole trader, not another business) , and sending one is often the point at which a slow-paying client finally takes the debt seriously - because it signals that court action is a real possibility, not an empty threat.

A letter before action should include:

  • Your business name and the client's full name/company name and address.
  • The invoice number(s), date(s), and total amount outstanding.
  • The original payment terms and the date payment became due.
  • A clear statement that you are entitled to claim statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998 .
  • A final deadline for payment - commonly 14 days from the date of the letter.
  • A statement that you intend to pursue court action (such as Money Claim Online or the small claims track) if payment is not received by that deadline.
Template opening line: "This letter is a formal request for payment of the outstanding invoice(s) detailed below. If payment in full is not received within 14 days of the date of this letter, I intend to pursue recovery of this debt through the appropriate legal process, including a claim for statutory interest and compensation."

Send it by email and by post (or recorded delivery) so there's a clear paper trail proving it was received.

Step 4: Escalation - Small Claims and Beyond

If the letter before action deadline passes with no payment and no reasonable explanation, you have a few options:

  • Money Claim Online (MCOL) - a straightforward, low-cost way to issue a claim for debts, well suited to invoices below the small claims track threshold of £10,000 .
  • Small claims court - for larger disputed amounts, though this takes longer and may need more evidence.
  • Statutory interest and compensation - remember these can be added to the claim itself, which strengthens your position and can offset the cost and hassle of chasing.
  • A debt collection agency - sometimes worth it for larger sums where you'd rather hand the process to a specialist.

Court action should always be the last resort - it costs time and can damage a business relationship permanently. But simply knowing you're willing to go there, and having the paper trail to back it up, is often enough to get paid without ever filing a claim.

What If the Client Disputes the Invoice?

Not every late payment is a simple cash flow delay - sometimes the client genuinely disagrees with the invoice. Before you escalate to a letter before action, it's worth ruling this out, because chasing a disputed invoice as if it were a straightforward non-payment can backfire and slow things down further.

  • Ask directly: "Is there a query with this invoice, or is it simply a timing issue on payment?"
  • Check the invoice matches what was actually agreed - scope, rate, and any variations - and be ready to send supporting evidence such as a quote, contract, or email trail.
  • If there's a genuine dispute over part of the invoice, consider whether the undisputed portion can be paid immediately while the disputed element is resolved separately.
  • Document the resolution in writing once agreed, so there's no confusion later about what was owed and what was settled.

Genuine disputes are relatively rare compared to simple late payment, but treating every non-payment as a dispute (or vice versa) wastes time. A quick, direct question early on saves a lot of back-and-forth.

How Many Reminders Before You Escalate?

There's no fixed legal rule on how many reminders you must send before moving to a letter before action, but a sensible rhythm for most UK small businesses looks like this:

  • Day of due date: automatic reminder - many clients simply need the nudge.
  • 7 days overdue: friendly follow-up email or call.
  • 14-21 days overdue: firmer follow-up, restating terms and mentioning statutory interest.
  • 21-30 days overdue: formal letter before action with a clear final deadline.
  • Beyond deadline: Money Claim Online, small claims, or a debt collection agency, depending on the amount and relationship.

Adjust the pace to the size of the invoice and the strength of the relationship - a long-standing client who's a week late deserves a different tone to a new client who's gone silent on a large invoice.

Common Questions About Chasing Late Invoices

Can I charge interest on a late invoice as a sole trader?

Yes. The statutory right to claim interest under the Late Payment of Commercial Debts (Interest) Act 1998 applies to business-to-business transactions regardless of whether you trade as a sole trader, partnership, or limited company . You don't need a specific clause in your contract to claim it, though stating your payment terms clearly on every invoice still helps.

Should I stop working for a client who pays late?

That's a business judgement rather than a legal one. Some businesses build in a rule - such as requiring a deposit or moving to payment-on-completion - for clients who've been late more than once. Your invoicing history is useful evidence here: a dashboard that shows which clients consistently pay late helps you make that call with data, not just frustration.

Do I need a solicitor to send a letter before action?

No - a letter before action is something any business can write and send itself, provided it includes the key details: amount owed, original terms, a clear final deadline, and a statement of intent to pursue court action if unpaid. Many small businesses send these without legal help; a solicitor's letter is usually reserved for larger, more contested debts.

The Best Fix Is Prevention

Chasing late invoices is a necessary skill, but the businesses that spend the least time on it are the ones who've made it hard for a late payment to happen quietly. A few habits make a real difference:

  • Clear payment terms on every invoice - state the due date explicitly, not just "30 days," and include your bank details or payment link.
  • Professional, consistent invoice formatting - see our UK invoice templates for the fields that make an invoice look (and function) like a serious demand for payment.
  • Automatic reminders - software that emails the client before and after the due date, without you having to remember to do it.
  • Visibility over who owes what - a simple dashboard showing overdue invoices at a glance means nothing slips through the cracks.

This is exactly the gap WDI Billing is built to close. Your invoicing stays under your own control - in Prepare mode, nothing is sent anywhere automatically, including to HMRC - while automated reminders and clear payment tracking do the quiet work of chasing on your behalf. Because your data stays yours, with clean exports whenever you need them, you're never locked into one platform just to keep your invoice history intact.

Start Chasing Less, and Get Paid Faster

Late payment is a fact of business life, but it doesn't have to consume your week. With clear terms, professional invoices, and automatic reminders doing the early chasing for you, most overdue invoices resolve themselves long before a letter before action is ever needed. Try WDI Billing free and see how much easier it is to invoice, remind, and get paid - all while your books stay yours. Explore our full UK accounting software range or check pricing to get started today.