Unpaid invoices · England and Wales
They will not pay. What can you actually do?
There are five steps, they work in order, and most people stop at the second one. Before any of them, one thing worth knowing: if your customer is a business, you are already owed more than the invoice.
What the law already adds
Under the Late Payment of Commercial Debts (Interest) Act 1998, a late business-to-business invoice carries statutory interest at 11.75% a year and a fixed compensation sum, per invoice. It applies by default. Your terms do not have to mention it.
| Invoice | Interest per day | At 60 days late | Plus compensation |
|---|---|---|---|
| £2,000.00 | £0.64 | £38.63 | £70.00 |
| £5,000.00 | £1.61 | £96.58 | £70.00 |
| £10,000.00 | £3.22 | £193.15 | £100.00 |
| £25,000.00 | £8.05 | £482.88 | £100.00 |
Compensation is per invoice, not per customer. A debtor sitting on four late invoices owes it four times, and it is a minimum rather than a cap: see the £40, £70 and £100 explained. Work out your own figures on the calculator — it takes the amount and due date in the link, so a calculation can be sent to somebody rather than described.
The five steps
Step two has four templates, one for each moment: the first reminder, the statement, the broken promise, and the last one before it leaves your hands.
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Check what you are owed on top of the invoice
If your customer is a business, the Late Payment of Commercial Debts (Interest) Act 1998 already entitles you to interest and a fixed sum, whether or not your terms mention it. Most people never claim it because nobody has ever shown them the figure. It is not a penalty you are choosing to impose; it is compensation the law already provides.
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Send one clear, dated demand
Not a fifth polite reminder. One message with the invoice number, the amount, the original due date, a specific date for payment, and a sentence saying you reserve the right to add statutory interest and compensation. A deadline you will actually act on is worth more than three you will not. There are four templates for this, one per moment.
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Do the thing you said you would do
This is where most chasing fails. If the date passes and nothing happens, you have taught your customer that your deadlines are decorative, and every message after that is weaker than the one before. Escalate on the day you said, even if the escalation is small.
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Put it in a different name
A letter that arrives from somewhere other than the person who did the work changes who reads it. It stops being a supplier grumbling and starts being a file. This is usually the step that moves a debtor who has been ignoring emails for two months.
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Letter before action, then the county court
A compliant letter before action is a legal prerequisite, not a threat: skipping it can cost you costs later even if you win. Money Claim Online handles most trade debts, and the fee is recoverable. Most debts settle at this point, which is precisely why the step exists.
When none of this is the answer
- The debt is genuinely disputed. Resolve the dispute. Chasing through it weakens you if it ever reaches a judge.
- The customer is a private individual. The Act does not apply, the figures above are wrong for you, and the conduct rules are stricter.
- The company is insolvent. Check Companies House first. Chasing a dissolved company is effort spent on nothing.
- It is a very small invoice. Sometimes the honest answer is that your time is worth more than the debt.
Questions
- Can I charge interest if my terms do not mention it?
- Yes, if the customer is a business. The 1998 Act applies by default to commercial debts and does not require a clause in your contract. If your contract has its own late-payment term, that can replace the statutory one, so check it first.
- How much interest can I claim?
- Statutory interest runs at 11.75% a year on a debt in the current reference period, simple rather than compound, from the day after payment was due. The rate is fixed by when the invoice fell due, not by today's Bank of England base rate.
- What if the customer is a private individual, not a business?
- Then the Act does not apply. Interest on a consumer debt is a matter of what your contract says, and the whole approach has to be gentler: there are conduct rules around chasing consumers that do not apply between businesses. Do not use the commercial figures on a homeowner.
- They say the work was defective. What now?
- Stop chasing and deal with the dispute. A genuine dispute has to be resolved on its merits, and chasing through it damages your position if it ever reaches a judge. A dispute raised for the first time only after you asked for money is a different matter, but it still needs answering rather than ignoring.
- Is it worth it for a small invoice?
- Often not, and that is worth saying honestly. Below a few hundred pounds the time costs more than the debt. The fixed compensation helps, but it does not turn a £200 invoice into a project worth a fortnight of your attention.
If you would rather not do it yourself
Hound runs those five steps for you, in your name, and claims the interest. It is built for limited-company debtors: if yours is a private customer, we prepare everything and you send it, because that is what the rules require.
The calculator and everything on this page are free and need no account. Read why the rate is what it is, or the twelve ways trades guarantee they will not get paid.