Customer Not Paying Invoice: UK Steps From Reminder to Court

75% a year, and the Commercial Payments Bill now before the House of Commons would make late-payment interest mandatory and cap large firms' payment terms at 60 days.

Customer not paying invoice: the short answer

Confirm the debt is due and undisputed, chase it firmly, add statutory interest and compensation, then send a formal letter before claim; if that fails, issue a court claim or, for a company with no genuine defence, a statutory demand. Each rung costs more than the last.

• Days 1 to 14 overdue. Reminder, a call to whoever approves payments, and a check the invoice reached the right inbox.
• Weeks 2 to 6. Final reminder, suspension of further supplies, and a written claim for statutory interest and compensation.
• Weeks 6 to 10. Letter before claim under the correct pre-action rules.
• After the response period. Money claim online, statutory demand or, for larger or contested sums, a solicitor-led claim.

First checks before you chase an unpaid invoice

Before escalating, make sure you are chasing the right legal person for a sum that is actually due.

• The contract. Find the terms, order confirmation or emails, and note the payment date, any interest, retention of title or dispute resolution clause.
• The debtor. Is the customer a company, an LLP, a partnership or a sole trader? Check the registered office and filing history at Companies House; our guide to filing accounts with Companies House explains what overdue filings can signal about a customer's health, and the identity verification regime for directors makes the officer records more reliable than they were.
• Delivery. Keep proof the goods arrived or the work was done: delivery notes, sign-offs, timesheets.
• Any complaint. If the customer has raised a quality issue, deal with it in writing. A genuine dispute changes which recovery routes are open to you.

Construction suppliers can also use statutory adjudication, which produces an enforceable payment decision far faster than a trial.

Credit control steps that recover most overdue invoices

Consistent, documented chasing recovers most overdue invoices without any formal step.

• Find the blockage. Ask accounts payable whether the invoice is on their system, approved and scheduled.
• Escalate. Move from accounts to your commercial contact, then the finance director.
• Put it in writing. Confirm every call and promised date by email.
• Use your leverage. If the contract allows, suspend further deliveries or work.
• Agree a plan, on terms. A short written instalment plan, with the whole balance due on any missed payment, often beats a contested claim.

If the customer says it cannot pay rather than will not pay, weigh the insolvency risk early: our report on September 2026 insolvency figures shows the trend, and an unsecured supplier ranks low if the customer fails.

Late payment interest and compensation under the 1998 Act

Unless your contract sets its own substantial remedy, the Late Payment of Commercial Debts (Interest) Act 1998 implies statutory interest and fixed compensation into business-to-business contracts for goods or services.

When an invoice becomes late

Interest runs from the day after the agreed payment date. If no date was agreed, the debt is late 30 days after the later of performance and the customer receiving notice of the amount. Agreed terms longer than 60 days for a business customer are cut back to 60 days unless they are not grossly unfair to the supplier; for public authorities the limit is 30 days.

The rate: 8% over the reference rate

The rate is set by the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 at 8% a year over the Bank of England rate in force on 30 June (for interest that starts to run between 1 July and 31 December) or 31 December (for interest that starts between 1 January and 30 June). The Bank of England has held Bank Rate at 3.75% since 18 December 2025, a cut we covered in our report on the December 2025 decision, so the statutory rate for debts falling due between 1 July and 31 December 2026 is 11.75%. The Monetary Policy Committee's next decision is due today, 5 November, but it cannot change that figure: the rate is fixed for each debt when interest starts to run.

On a £10,000 invoice that fell due on 1 August 2026, annual interest is £1,175, about £3.22 a day, so 90 days of lateness adds roughly £290. It is simple interest, not compound.

Fixed compensation and reasonable costs

Once interest starts to run, section 5A of the 1998 Act adds a fixed sum: £40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. Where your reasonable recovery costs exceed that sum, you can claim the difference. Claim it per invoice, in writing. You cannot claim statutory interest if your contract already provides a substantial contractual rate.

Letter before action for an unpaid invoice: which rules apply

The court expects a formal letter before claim, and the rules depend on who owes you the money.

Individuals and sole traders: the debt protocol

The Pre-Action Protocol for Debt Claims applies when a business claims from an individual, including a sole trader. It does not apply to debts owed by companies. The Letter of Claim must state the amount, whether interest continues, the agreement behind the debt and how to pay, and enclose a statement of account, the protocol's Information Sheet and Reply Form, and a Financial Statement. It should be posted on the date it bears, and may also be emailed.

If the debtor does not reply within 30 days of the date on the letter, you may issue proceedings. If the debtor says they are seeking debt advice, allow a reasonable period and do not issue less than 30 days after receiving the Reply Form.

Companies and LLPs: the Practice Direction

For a company debtor, the Practice Direction on Pre-action Conduct applies. Set out the claim, the facts and how the amount is calculated, and allow a reasonable time to respond: 14 days in a straightforward case. The court can penalise non-compliance in costs, even if you win.

Small claims court for an unpaid invoice: money claims online

If the letter fails, most unpaid invoices are claimed online in the county court. Money Claim Online accepts claims up to £99,999.99, and claims of £10,000 or less normally go to the small claims track.

If the defendant does not respond by the date it is given, you can request judgment without a hearing. If it defends, GOV.UK's money claim guidance confirms that parties to claims of £10,000 or less must attend a free one-hour telephone mediation run by HM Courts and Tribunals Service; failing to attend can lead to sanctions, including the claim being struck out. You can represent yourself at any hearing.

Court fees are payable up front and are usually recoverable from the defendant if you win. These are the current figures from the HMCTS civil court fees list (EX50), updated 26 October 2026:

Value of claim (including interest)	Issue fee	Hearing fee if defended
Up to £300	£35	£27 (small claims)
£300.01 to £500	£50	£59 (small claims)
£500.01 to £1,000	£70	£85 (small claims)
£1,000.01 to £1,500	£80	£123 (small claims)
£1,500.01 to £3,000	£115	£181 (small claims)
£3,000.01 to £5,000	£205	£346 (small claims)
£5,000.01 to £10,000	£455	£346 (small claims)
£10,000.01 to £200,000	5% of the claim	£619 fast track; £1,334 intermediate or multi-track
Over £200,000	£10,000	£1,334

Larger claims can be issued in the High Court; see our explainer on the Business and Property Courts.

Statutory demands and winding-up petitions

A statutory demand is a formal written demand that, if ignored for three weeks, lets a creditor treat a company as unable to pay its debts and present a winding-up petition. It is powerful, but only for debts the customer cannot genuinely dispute.

Under section 123 of the Insolvency Act 1986, a company is deemed unable to pay its debts if a creditor owed more than £750 serves a demand in the prescribed form at its registered office and the company neglects to pay, secure or compound the debt for three weeks. An unsatisfied judgment, where enforcement is returned unpaid, is another statutory ground. There is no court fee to serve a demand; entering a winding-up petition costs £352, plus the official receiver's deposit, under the EX50 list.

Use it with care. The Companies Court will not let a petition be used as a debt-collection tool where the debt is disputed on substantial grounds, and a creditor who presses on can be ordered to pay the company's costs. A petition can also lead the company's bank to freeze its accounts, or push the customer into administration. Our guide to what happens when a company goes into administration explains where unsecured creditors then stand. For sole traders, the equivalent route is a bankruptcy petition, which requires debts of at least £5,000.

Enforcing a judgment the customer still ignores

If the customer still does not pay, you choose an enforcement method and pay a further fee, so investigate its assets first.

• Order to obtain information (£69). The debtor, or an officer of a debtor company, must attend court and answer questions about its assets.
• Warrant of control (£96). County court enforcement agents collect payment or take goods; a High Court writ of control costs £82.
• Third-party debt order (£139). Freezes money owed to the debtor, typically a bank balance, and orders it paid to you.
• Charging order (£139). Secures the debt on the debtor's property.
• Attachment of earnings (£139). For individual debtors in employment, deductions from wages.

Recovery routes compared: cost, time and when to use

Choose the cheapest route that will actually move the customer. Court fees are from EX50 and exclude legal costs.

Route	Direct cost	Typical timescale	Best used when
Reminders, calls, stopping supply	Staff time	Days to weeks	The debt is undisputed and the relationship matters
Statutory interest and compensation	None; adds 8% over reference rate plus £40 to £100	Immediate, in writing	Any overdue business-to-business invoice without a contractual rate
Letter before claim	Your time, or a solicitor's letter fee	14 days (company) or 30 days (individual or sole trader)	Always, before issuing a claim
Money Claim Online	£35 to £455 up to £10,000; 5% above	Weeks if undefended, months if defended	A clear debt against a customer with assets
Statutory demand and winding-up petition	No fee for the demand; £352 petition plus deposit	Three weeks for the demand, longer for a petition	An undisputed debt over £750 owed by a company
Enforcement after judgment	£69 to £139 per application	Weeks to months	Judgment entered and still unpaid
Cross-border claim or recognition	Local counsel and court fees	Months	The customer and its assets are outside the UK

The Small Business Commissioner and the Commercial Payments Bill

Stronger statutory protection is on its way but not yet in force. Meanwhile the Office of the Small Business Commissioner, an independent public body set up under the Enterprise Act 2016, offers a free and confidential enquiry service for small UK businesses in an unresolved payment dispute with a larger customer.

The government introduced the Commercial Payments Bill, which it calls the Small Business Protections Bill, in the House of Lords on 19 May 2026. According to the government's announcement, it would:

• cap payment terms at 60 days for large firms paying smaller suppliers;
• make interest on late payments mandatory, set at 8% above the Bank of England base rate;
• give the Small Business Commissioner powers to investigate poor payment practices, adjudicate disputes and fine persistent late payers;
• ban retention payments under construction contracts; and
• require persistently late-paying large companies' boards or audit committees to explain their record.

The Bill completed its Lords stages on 20 October and received its first reading in the Commons on 21 October 2026; its second reading there has not yet taken place. Until it is enacted and commenced, the 1998 Act and the existing payment-practices reporting rules apply, which we covered in our report on the Fair Payment Code and reporting duties.

When the customer is abroad

Cross-border recovery is harder since Brexit, and the forum you choose decides whether a judgment can be enforced where the assets are.

UK claimants can no longer use the European Order for Payment or the European Small Claims Procedure: the retained versions of both regulations were revoked from the end of the transition period. The main gap-filler is the 2019 Hague Judgments Convention, which the Hague Conference status table shows entered into force for the UK on 1 July 2025. It already applied between the EU (all member states except Denmark) and Ukraine, and also covers Uruguay, Albania, Montenegro and Andorra. It covers only proceedings started after it took effect between the two states concerned.

• Read the jurisdiction clause. An exclusive English jurisdiction clause engages the 2005 Hague Choice of Court Convention; an arbitration clause sends you to a tribunal. Our comparison of arbitration and litigation sets out the trade-offs.
• Sue where the assets are. A local claim can be quicker than suing in England and enforcing abroad; our guide on how to enforce a foreign judgment covers the alternatives.
• Arbitration awards travel well. Awards are enforceable in over 170 New York Convention states, as explained in our piece on enforcing arbitration awards internationally.

Mistakes that cost creditors money

The commonest errors are procedural.

• Overclaiming interest. Claiming statutory interest when the contract sets its own rate, or compounding it, invites a costs argument.
• Skipping pre-action steps. A short-notice letter to a sole trader breaches the protocol and risks costs sanctions.
• Using a statutory demand on a disputed debt. It can be set aside or restrained, with costs against you.
• Waiting too long. A contract debt claim must generally be issued within six years, but evidence and assets fade sooner.

When to bring in an adviser

Bring in a solicitor when the debt is large, the customer has raised a counterclaim, you are considering a winding-up petition, or the customer is abroad. Litigation insurance and third-party funding can make larger claims viable, as our explainer on litigation funding in the UK describes. Specialist dispute resolution lawyers, including litigators in England, and insolvency and restructuring advisers are listed in our Find an Expert directory.

Frequently asked questions

What should I do if my client hasn't paid an invoice?

Check the debt is undisputed and the invoice reached the right person, then chase in writing and by phone, adding statutory interest and compensation if your contract has no interest clause. If that fails, send a letter before claim, then issue a county court claim or, against a company, consider a statutory demand.

Can I charge interest on overdue invoices in the UK?

Yes, for business-to-business debts. The Late Payment of Commercial Debts (Interest) Act 1998 allows simple interest at 8% over the Bank of England reference rate, currently 11.75% for debts falling due between July and December 2026, plus £40, £70 or £100 compensation per invoice, unless your contract sets its own substantial remedy.

How long can an invoice go unpaid before I take action?

You can act once the agreed payment date passes. If none was agreed, a business invoice is late 30 days after delivery or receipt of the invoice, whichever is later. Before suing, allow 14 days for a company to answer a letter before claim, or 30 days for an individual or sole trader.

Can a customer refuse to pay an invoice?

Only with a genuine legal reason, such as defective goods, work not done, or an invoice that does not match the contract. A real dispute can defend a claim and block a statutory demand, but refusing a valid, undisputed invoice exposes the customer to interest, compensation, court fees and enforcement.

What happens if a company does not pay an invoice?

You can claim the debt with statutory interest and compensation in the county court and enforce any judgment through enforcement agents, third-party debt orders or charging orders. If the debt exceeds £750 and is undisputed, a statutory demand followed by a winding-up petition is also available, though it can push the company into insolvency.

How much does it cost to take a customer to small claims court?

Under the HMCTS fee list updated on 26 October 2026, issuing a money claim costs £35 for claims up to £300, rising to £455 for claims of £5,000.01 to £10,000. A defended small claim adds a hearing fee of £27 to £346. Fees are usually recoverable from the defendant if you win.

Do I need a solicitor to claim an unpaid invoice?

Not for a straightforward claim. Businesses can issue through Money Claim Online and represent themselves on the small claims track, where telephone mediation is free and mandatory for claims of £10,000 or less. Take advice for larger claims, counterclaims, insolvency steps or a customer abroad.

Can I use a statutory demand for an unpaid invoice?

Yes, if the customer is a company, the debt exceeds £750 and there is no genuine dispute. If it is not paid, secured or compounded within three weeks, the company is deemed unable to pay its debts. Against a disputed invoice it is risky: the court may set it aside and order you to pay costs.

How long do I have to claim an unpaid invoice?

For most contract debts in England and Wales, proceedings must be issued within six years of the date payment fell due. Do not rely on that window: evidence goes stale and customers fail, so a prompt letter and claim usually recover most.

Can I recover an unpaid invoice from a customer in the EU?

Yes, but not through the European Order for Payment, which UK claimants can no longer use. You can sue in England and enforce under the 2019 Hague Judgments Convention, in force for the UK since 1 July 2025, sue locally, or arbitrate if the contract says so.

Sources

1. Late Payment of Commercial Debts (Interest) Act 1998, section 5A: legislation.gov.uk
2. Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4: legislation.gov.uk
3. Bank of England, Interest rates and Bank Rate: bankofengland.co.uk
4. Civil Procedure Rules, Pre-Action Protocol for Debt Claims: justice.gov.uk
5. Civil Procedure Rules, Practice Direction on Pre-action Conduct and Protocols: justice.gov.uk
6. GOV.UK, Make a court claim for money: gov.uk
7. HMCTS, Civil court fees (EX50), updated 26 October 2026: gov.uk
8. Insolvency Act 1986, section 123: legislation.gov.uk
9. Department for Business and Trade, Largest crackdown on late payments in over 25 years as landmark Bill enters Parliament (19 May 2026): gov.uk
10. HCCH, Status table of the 2019 Judgments Convention: hcch.net

About this article

Researched and written by The Corporate INTL Newsroom and checked against UK legislation, the Civil Procedure Rules, HMCTS fee tables, Bank of England data, government announcements and the Hague Conference treaty records. It focuses on England and Wales; Scotland and Northern Ireland have their own courts and procedures. This article is general information, not legal advice; for a specific debt, consult a qualified adviser. Last reviewed 5 November 2026. For more analysis like this, visit the Corporate INTL newsroom or subscribe to our newsletter.