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

When you run a business, whether you're a freelancer, sole trader or small company, 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, which is interest set by law, and fixed compensation for late payment.[1][2]

Before starting court action, both sides are normally expected to exchange enough information to understand each other's position and try to resolve the dispute.[3]

The late-payment rules in step 3 apply across the UK.[1][2] The court process from step 4 onwards is for England and Wales. Scotland and Northern Ireland have different court processes.[4]

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, statutory interest is currently 8 percentage points above the Bank of England base rate.[1]

You 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.[2]

These rights come from late-payment legislation. However, if your contract has its own interest rate or other remedy for late payment, the statutory rate may not apply.[1][11]

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 try to resolve disputes before court proceedings begin.[3]

If your client is an individual or sole trader, a specific Debt Claims Protocol may apply and requires additional steps before you start a court claim.[5]

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.[6] If you win, you may be able to recover the court fee. Recovery of other legal costs on the small claims track is limited.[6][7]

6. Participate in Mediation if Required

If you make a money claim for £10,000 or less and the client disputes it, you will be required to attend mediation. The court organises the appointment and the service is free.[8]

Mediation is confidential and gives both sides an opportunity to settle the dispute without going to a hearing.[8]

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 ask the court to enforce it. Depending on the circumstances, options include:

• a Warrant of Control;
• an Attachment of Earnings Order;
• a Third Party Debt Order; or
• a Charging Order.[9]

Each option works differently and you will normally need to pay a court fee when asking the court to enforce the judgment.[9]

8. Do Not Ignore the Limitation Period

In England and Wales, you normally have six years to bring a court claim for money owed under an ordinary contract.[10]

If you wait too long, the client may be able to argue that you are out of time to bring the claim.[3][10]

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 court action becomes necessary, keeping accurate records and following the steps expected before starting a claim will place you in the strongest position to recover what you are owed.[3]

Sources

[1] GOV.UK, Late commercial payments: Interest on late commercial payments

[2] GOV.UK, Claim debt recovery costs on late payments

[3] Civil Procedure Rules, Practice Direction: Pre-Action Conduct and Protocols

[4] GOV.UK, Make a court claim for money

[5] Civil Procedure Rules, Pre-Action Protocol for Debt Claims

[6] GOV.UK, Make a court claim for money: Court fees

[7] Civil Procedure Rules, Part 27: The small claims track

[8] GOV.UK, Resolve your claim through mediation

[9] GOV.UK, Enforce a judgment

[10] Limitation Act 1980, section 5

[11] Late Payment of Commercial Debts (Interest) Act 1998, section 8