Commercial debt recovery for UK small businesses
A client hasn't paid your invoice. Here's the step-by-step process UK businesses use to recover what they're owed — and how to do most of it without a lawyer or a collection agency.
1. Send a friendly reminder
Most late invoices are forgotten, not disputed. A polite reminder on the day after the due date, with the invoice attached and a clear way to pay, recovers the majority of overdue money.
2. Follow up firmly
If there's no reply after a week, send a firmer reminder. Mention the amount, how many days it's overdue and that you're entitled to add statutory interest and compensation.
3. Add statutory interest and a fixed fee
Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge interest at 8% above the Bank of England base rate on business-to-business invoices, plus a fixed fee of £40 (debts under £1,000), £70 (£1,000–£9,999.99) or £100 (£10,000 or more), charged once per invoice. If your contract sets its own interest rate, that rate applies instead. If no payment date was agreed, an invoice is legally late 30 days after the client receives it.
4. Send a final notice / letter before action
Before going to court, you should send a letter before action giving the debtor a reasonable deadline to pay or respond — commonly 14 days for a limited company. If the debtor is a sole trader or individual, the Pre-Action Protocol for Debt Claims applies and they must be given 30 days. Courts expect this step before a claim.
5. Court or a collection agency
If they still don't pay, you can make a claim through the government's online money claims service (England and Wales, for a fixed amount), or use a debt collection agency, which usually takes a percentage of what it recovers.
How much can I add to a late invoice?
Use our free late payment interest calculator to work out the interest and fixed fee for any overdue invoice in seconds.
Let Paid do the chasing
Paid sends steps 1 to 3 for you automatically: a friendly reminder, a firmer follow-up and a final notice, each with a "Pay now" link. It can add statutory interest and the fixed fee, reads your clients' replies, and stops the moment you're paid. Start free with up to 3 invoices.
Start recovering invoices freeThis is a general guide, not legal advice. Statutory interest applies to business-to-business debts across the UK. Court steps above are for England and Wales; Scotland and Northern Ireland have their own court processes. Sources: GOV.UK and the Late Payment of Commercial Debts (Interest) Act 1998.