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Step 1 — Send a polite written reminder on day 1 of overdue
As soon as an invoice passes its due date, send a short, factual email referencing the invoice number, amount, and original due date. Keep the tone neutral. Most late payments at this stage are administrative oversights on the client's side, and a direct prompt resolves them without friction.
Attach a copy of the original invoice and confirm your bank details. Avoid threatening language at this stage; reserve that for later escalation steps.
Step 2 — Issue a formal late-payment letter at day 7
If no payment or contact is received within seven days of your reminder, send a formal letter on company headed paper. State clearly that the invoice is overdue, that statutory interest is accruing under the Late Payment of Commercial Debts (Interest) Act 1998, and that you intend to pursue the debt if it remains unpaid.
Keep a copy of every communication in a dedicated file. Courts and debt recovery solicitors will want to see that you followed a reasonable escalation process before taking further action.
Step 3 — Add statutory interest and compensation to your demand
From the moment a B2B invoice becomes overdue you are legally entitled to charge interest at 8% above the Bank of England base rate, plus a fixed compensation amount (£40 for debts under £1,000; £70 for debts between £1,000 and £9,999; £100 for debts of £10,000 or more). Recalculate these figures on your formal demand letter so the debtor understands the total liability is growing.
You do not need a contract clause to claim this — the Act applies automatically to B2B transactions.
Step 4 — Use a debt collection agency or solicitor
If payment is still not forthcoming after two or three formal contacts, engage a commercial debt collection agency or a solicitor. Many agencies work on a no-win, no-fee basis and their letter alone often prompts payment. A solicitor can issue a letter before action, which is a formal pre-litigation notice required before most court proceedings.
Weigh agency fees against the value of the debt. For smaller amounts, the MCOL (Money Claim Online) service allows you to issue a county court claim yourself at relatively low cost.
Step 5 — Statutory demand and court action
For debts over £750 owed by a company, a statutory demand is a powerful tool: if the debt is not paid or disputed within 21 days, it provides grounds for a winding-up petition. This is a last resort — it can force a debtor company into insolvency — but the threat alone frequently produces payment. Take legal advice before issuing one.
County court judgments (CCJs) and, for larger amounts, High Court enforcement are the formal litigation routes. A CCJ registered against a debtor company affects its credit profile and can be enforced via bailiffs or charging orders.
Frequently asked questions
Can I charge interest on overdue invoices even if my contract does not mention it?
Yes. The Late Payment of Commercial Debts (Interest) Act 1998 automatically entitles you to charge 8% above the Bank of England base rate on overdue B2B invoices, regardless of whether your contract includes a specific late-payment clause.
At what point should I involve a solicitor rather than chasing myself?
Most directors involve a solicitor or commercial debt collector when a formal written demand has been ignored for more than 14 days, or when the debtor disputes the invoice. For sums above a few thousand pounds, professional recovery is usually cost-effective.
Does chasing a late invoice damage the business relationship?
A professional, graduated escalation — starting with a neutral reminder and only becoming firm when genuinely necessary — rarely damages relationships more than the unpaid invoice itself. Clear payment terms agreed upfront tend to prevent most disputes.
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