Every business that extends credit will eventually face an unpaid invoice. Whether it is a single overdue client or a growing ledger of late accounts, knowing the right steps to take — and when to take them — is the difference between recovering your money and writing it off.
This guide sets out the full process for chasing unpaid invoices in the UK, from the first polite reminder through to legal enforcement. Follow each stage in sequence and you maximise both your recovery rate and your legal position.
Stage 1: Send an Invoice Reminder
Before escalating, ensure the invoice itself is not the problem. Start with a professional reminder: confirm the invoice was received, verify the correct contact has it, and check that your bank details are correct. A surprising number of late payments are caused by invoices going to the wrong inbox or payment details being outdated.
Send your reminder by email with read receipt enabled, and follow up by phone if you have not had a response within 48 hours. Keep the tone professional — you want to preserve the relationship while making clear that payment is expected.
Document every contact: date, time, method, and outcome. This record is valuable if the matter escalates.
Stage 2: Issue a Formal Payment Demand
If a reminder produces no result within 7 to 14 days, send a formal payment demand. This is a more serious communication that:
- States the exact amount owed, including the original invoice amount plus any statutory interest accrued
- References the invoice number, date, and due date
- Sets a firm payment deadline (typically 7 days)
- States that you will take further action if payment is not received
Under the Late Payment of Commercial Debts Act 1998, you are entitled to charge statutory interest at 8% above the Bank of England base rate on overdue B2B invoices from the date payment was due. You can also add fixed debt recovery compensation of between £40 and £100 depending on the debt amount. Including these figures in your demand signals that you know your rights and are serious about recovery.
Send the formal demand by email and recorded first-class post. Sending by post creates a physical record that is harder for the debtor to dismiss.
Stage 3: Send a Letter Before Action
If payment is still not forthcoming after your formal demand, the next step is a letter before action (LBA). This is a specific document required under the Pre-Action Protocol for Debt Claims before you can issue court proceedings.
The LBA must include:
- Full details of the debt and how it arose
- The total amount claimed, including interest and any charges
- A clear statement that you intend to issue court proceedings if payment is not made
- A reasonable deadline for response (usually 14 to 30 days)
- An Information Sheet and Reply Form as required by the protocol
Courts take compliance with pre-action protocols seriously. Skipping this step can result in costs penalties even if you win the case. If you are not confident drafting a compliant LBA, a debt collection agency or solicitor can do this for you.
Stage 4: Instruct a Debt Collection Agency
If the LBA does not produce payment, this is the point at which many businesses choose to instruct a professional debt collection agency. An agency brings several advantages over continuing to chase the debt yourself:
- Professional demand letters from a named agency carry more weight than letters from the creditor directly
- Agencies have access to skip tracing tools to locate debtors who have moved or become uncontactable
- Experienced collectors understand negotiation tactics and how to overcome objections and stalling
- Many agencies operate on a no win no fee basis, so you only pay if they recover
When instructing an agency, provide copies of the original invoice, all correspondence to date, and the signed contract or order if you have one. The stronger your documentation, the faster and more effective the recovery process.
Stage 5: Issue a Court Claim
If the agency’s demands do not produce payment, the next step is formal legal action. For most commercial debt, this means issuing a money claim through HM Courts and Tribunals Service.
You can file online using the Money Claim Online (MCOL) service at moneyclaim.gov.uk for debts up to £100,000. The court fee depends on the claim value, ranging from £35 for claims under £300 to several hundred pounds for larger amounts.
Once a claim is issued, the debtor has 14 days to respond. If they do not respond or do not defend, you can apply for a default judgment. If they defend the claim, the case is allocated to the appropriate track and a hearing is scheduled.
Stage 6: Enforce a County Court Judgment
Winning a County Court Judgment (CCJ) is not the end of the process if the debtor still does not pay. A CCJ is a court order, but it does not automatically transfer money to you. Enforcement is a separate step.
The main enforcement options available to businesses in England and Wales are:
High Court Enforcement Officers (HCEOs)
For CCJs over £600, you can transfer the judgment to the High Court and instruct an HCEO. HCEOs have broader powers than County Court bailiffs, including the ability to take goods from business premises. They are generally faster and more effective for commercial debts.
Attachment of Earnings
If the debtor is an individual or sole trader who is employed, you can apply for an attachment of earnings order, which directs the debtor’s employer to deduct payments from their salary and pay them to you.
Third-Party Debt Order
If you know the debtor holds funds in a bank account, you can apply for a third-party debt order that freezes and redirects those funds to satisfy the judgment.
Charging Order
If the debtor owns property, a charging order secures the debt against the property. The money is recovered when the property is sold, remortgaged, or by applying for an order for sale.
When to Use a Statutory Demand
For undisputed debts over £750 owed by a company (or over £5,000 owed by an individual), a statutory demand is a powerful tool. A statutory demand formally notifies the debtor that if they do not pay within 21 days, you will apply to wind up the company (or make the individual bankrupt).
The threat of insolvency proceedings can be a significant motivator for debtors who have assets to protect. However, a statutory demand should only be issued for debts that are genuinely undisputed — using one for a contested debt can expose you to a costs claim from the debtor.
Practical Tips to Speed Up Recovery
- Act quickly: The probability of recovering a debt drops significantly with age. Act within 30 to 60 days of the due date.
- Document everything: Every email, letter, call, and payment attempt should be recorded with dates and outcomes.
- Know who you are dealing with: Check whether the debtor company is still actively trading before spending money on legal proceedings.
- Consider the commercial relationship: If you want to preserve the relationship, a phone call before escalating to legal action can resolve the matter more quickly than formal correspondence.
- Get professional help early: The earlier you involve a specialist, the higher the recovery rate. Many businesses wait too long before instructing an agency or solicitor.
When to Write Off the Debt
Not every debt is worth pursuing to judgment and enforcement. If the debtor is insolvent, dissolved, or has no assets, the cost of legal proceedings may exceed the likely recovery. Before investing in court fees and enforcement, run a basic company check via Companies House and consider a credit report on the debtor.
A good debt collection agency will advise you honestly on the viability of recovery before asking you to commit to a course of action.
Get Professional Help Today
If you have outstanding invoices and are not sure which step to take next, Jack Russell Debt Collection offers a free, no-obligation consultation. We assess your situation, advise on the most effective recovery route, and operate on a no win no fee basis for most commercial debts.
Do not let unpaid invoices drain your cash flow. Contact Jack Russell today and find out what we can recover for your business.
Disclaimer: This article is for general information purposes only and does not constitute legal or financial advice. For advice specific to your circumstances, consult a qualified debt recovery specialist or solicitor.
Frequently Asked Questions
How long do I have to chase an unpaid invoice in the UK?
Under the Limitation Act 1980, you have six years from the invoice due date to pursue an unpaid debt through the courts. For debts acknowledged in writing or partially paid, the six-year clock resets. Acting sooner significantly improves your chances of recovery as debtor circumstances and evidence quality both deteriorate over time.
What is a letter before action and do I have to send one?
A letter before action (LBA) formally notifies the debtor that you intend to issue court proceedings if the debt is not paid. For business debts, the Pre-Action Protocol for Debt Claims requires you to send a compliant LBA before filing a court claim. Courts expect compliance and may penalise claimants who skip this step, even if the debt is undisputed.
Can I charge interest on an unpaid invoice?
Yes. Under the Late Payment of Commercial Debts Act 1998, you can charge statutory interest at 8% above the Bank of England base rate on overdue B2B invoices. You are also entitled to claim a fixed debt recovery compensation charge of £40 for debts under £1,000, £70 for debts between £1,000 and £9,999, and £100 for debts of £10,000 or more. These rights apply automatically unless your contract specifies a higher rate.
When should I involve a debt collection agency?
Consider instructing a debt collection agency after your own reminder letters and calls have produced no result, typically after 30 to 60 days past the due date. A professional agency adds credibility to demands, has access to skip tracing tools if the debtor has moved, and can escalate to legal proceedings without you needing to manage the process directly.
What is the Small Claims Court limit for debt recovery in the UK?
In England and Wales, the Small Claims track applies to debts up to £10,000. Claims between £10,000 and £25,000 are usually allocated to the Fast Track. For debts over £25,000, claims proceed on the Multi Track, which involves higher court fees and usually requires solicitor representation. The online Money Claim service (MCOL) allows you to file claims for debts up to £100,000 without attending court in person.
What happens after I obtain a County Court Judgment?
A County Court Judgment (CCJ) is a formal court order that the debtor must pay. If the debtor still does not pay after 30 days, you can apply to enforce it. Enforcement options include using a High Court Enforcement Officer (HCEO) if you transfer the judgment, an attachment of earnings order if the debtor is employed, a charging order against property, or a third-party debt order to intercept funds held in a bank account.
Can I add my debt recovery costs to the amount I claim?
You can add statutory compensation under the Late Payment of Commercial Debts Act 1998, and if you go to court you may be awarded reasonable legal costs depending on the track. For Small Claims, recoverable costs are limited. On the Fast or Multi Track, the court has wider discretion to award costs against the losing party. A debt collection agency operating on a no win no fee basis charges a percentage of what is recovered rather than adding costs to the claim.
