Client Won't Pay? Here's Exactly What to Do (UK Freelancer Guide)

When you're self-employed, recovering unpaid invoices is part of running the business. The key is to escalate the matter methodically rather than jumping straight to legal action or waiting so long that the position becomes harder to resolve.

Lowdown

An unpaid invoice is generally a civil debt. Depending on the circumstances, you may be entitled to recover not only the outstanding invoice but also statutory interest and fixed compensation for late payment. Many payment disputes are resolved before a final court hearing, particularly where the parties communicate clearly and follow the appropriate pre-action process. (Late Payment of Commercial Debts (Interest) Act 1998; Civil Procedure Rules – Practice Direction – Pre-Action Conduct and Protocols)

Practical Advice

1. Check the Invoice Is Actually Overdue

Before escalating the matter, confirm:

• the payment due date has passed;
• the invoice was received;
• the client has the correct payment details; and
• there is no genuine dispute about the work completed.

Sometimes an overdue invoice is an administrative problem rather than a refusal to pay.

2. Send a Written Payment Reminder

Send a clear, professional reminder setting out:

• the invoice number;
• the amount outstanding;
• the due date; and
• when you expect payment.

Keep all communications in writing wherever possible.

3. Consider Statutory Interest

For qualifying business-to-business debts, the Late Payment of Commercial Debts (Interest) Act 1998 generally allows suppliers to claim statutory interest at 8 percentage points above the Bank of England base rate. (Late Payment of Commercial Debts (Interest) Act 1998; GOV.UK – Charging interest and debt recovery)

Qualifying creditors may also be entitled to fixed debt recovery compensation of:

• £40 for debts up to £999.99
• £70 for debts between £1,000 and £9,999.99
• £100 for debts of £10,000 or more

These statutory rights arise under the legislation and do not generally need to be included in your contract, although different rules may apply if the contract provides a substantial contractual remedy. Statutory interest cannot be claimed if the relevant contract states a different rate of interest.

4. Send a Letter Before Action

If payment is still not received, send a formal Letter Before Action.

It should explain:

• what is owed;
• why it is owed;
• any statutory or contractual interest claimed;
• the deadline for payment; and
• that court proceedings may be started if payment is not received.

Courts generally expect parties to exchange information and attempt to resolve disputes before litigation. (Civil Procedure Rules – Practice Direction – Pre-Action Conduct and Protocols)

5. Issue a County Court Claim

If the matter remains unresolved, consider issuing a County Court claim.

The court fee depends on the value of the claim and is calculated automatically if proceedings are started online. Court fees are generally recoverable if you succeed, although recovery of legal costs on the small claims track is limited. (HM Courts & Tribunals Service – Make a court claim for money)

6. Participate in Mediation if Required

For many defended money claims worth £10,000 or less, HMCTS will normally require the parties to participate in a free mediation appointment before the claim proceeds to a hearing.

Mediation is confidential and provides an opportunity to settle the dispute without the time and expense of a trial. (HM Courts & Tribunals Service – Resolve your claim through mediation)

7. Enforce the Judgment if Necessary

Winning your case does not automatically result in payment.

If the debtor fails to comply with the judgment, you may need to apply for enforcement. Depending on the circumstances, enforcement options include:

• a Warrant of Control;
• an Attachment of Earnings Order;
• a Third Party Debt Order; or
• a Charging Order.

Each enforcement method has its own procedure and court fee. (HM Courts & Tribunals Service – Enforce a judgment)

8. Do Not Ignore the Limitation Period

For most simple contract debts, court proceedings must generally be started within six years of the cause of action arising.

Waiting too long may allow the debtor to rely on limitation as a defence. (Limitation Act 1980, s.5)

Our Conclusion

Recovering an unpaid invoice is usually most effective when you escalate the matter in stages. Start with clear written reminders, add late payment interest where appropriate, send a properly drafted Letter Before Action and only then consider court proceedings.

If litigation becomes necessary, keeping accurate records and following the pre-action process will place you in the strongest position to recover what you are owed. (Civil Procedure Rules – Practice Direction – Pre-Action Conduct and Protocols)

Sources

• GOV.UK, Make a court claim for money — https://www.gov.uk/make-court-claim-for-money
• GOV.UK, Resolve your claim through mediation — https://www.gov.uk/make-court-claim-for-money/mediation
• GOV.UK, Enforce a judgment — https://www.gov.uk/make-court-claim-for-money/enforce-a-judgment
• GOV.UK, Late commercial payments: charging interest and debt recovery — https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt
• Civil Procedure Rules, Practice Direction – Pre-Action Conduct and Protocols — https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct
• Late Payment of Commercial Debts (Interest) Act 1998 — https://www.legislation.gov.uk/ukpga/1998/20/contents
• Limitation Act 1980, section 5 — https://www.legislation.gov.uk/ukpga/1980/58/section/5