Late payments are the quiet killer of UK small businesses. According to successive FSB surveys, tens of thousands of firms are pushed under every year by cash they were owed but never chased properly. The work was done, the invoice was sent — and then nothing.
Chasing money you're owed feels awkward. It shouldn't. You're not asking for a favour; you're collecting a debt for work you've already delivered. The trick is to have a calm, repeatable process so you're never improvising under pressure.
Here's the exact escalation ladder we recommend — with templates you can copy, paste, and send today.
First, Get Your Foundations Right
Most late-payment pain is preventable before the invoice even goes out. Before you start chasing, make sure you have:
- Clear payment terms on every invoice — the due date in plain numbers ("Payment due by 30 June 2026"), not "30 days net" buried in small print. See our guide on setting payment terms that actually get paid.
- A correct, complete invoice — right contact, right PO number, right bank details. "I never received it" and "it's with the wrong department" are the two most common stalling tactics, and a tidy invoice removes both.
- A record of when it was sent and when it's due. You can't chase what you can't track.
If those are in place, the rest is just following the ladder.
Step 1: The Polite Reminder (1–3 Days Overdue)
Don't wait a fortnight to hope it sorts itself out. The day after the due date passes, send a friendly nudge. Assume good faith — most late payments at this stage are genuine oversights.
Subject: Invoice [#1234] — now due
Hi [Name],
I hope you're well. Just a quick note that invoice [#1234] for [£amount] was due on [date]. I've attached a copy in case it's helpful.
Could you let me know when I can expect payment? If it's already on its way, please ignore this.
Thanks, [Your name]
Keep it short, warm, and attach the invoice again. No threats, no interest — just visibility.
Step 2: The Firm Follow-Up (7–14 Days Overdue)
No response, or a vague promise that didn't materialise? Time to be clearer. Reference the previous email, restate the amount, and give a specific deadline.
Subject: Overdue: Invoice [#1234] — response needed
Hi [Name],
Following my email of [date], invoice [#1234] for [£amount] is now [X] days overdue. I haven't yet received payment or a date for it.
Please arrange payment by [specific date, e.g. within 7 days]. If there's a problem with the invoice or a query holding it up, let me know today and I'll resolve it straight away.
Thanks, [Your name]
Two things matter here: a hard deadline and an invitation to flag a dispute. If there's a genuine problem, you want to hear about it now — not discover it at the courtroom door.
Step 3: Pick Up the Phone
Emails are easy to ignore; a polite phone call is not. Call, stay calm, and ask one direct question: "When will the invoice be paid?" Then confirm whatever they say in writing — a short follow-up email ("As discussed, you'll pay by Friday") creates a record and quietly raises the stakes.
A surprising number of overdue invoices clear within 48 hours of a single phone call.
Step 4: Charge Statutory Interest and Compensation
If you're dealing with another business (B2B), UK law is firmly on your side. Under the Late Payment of Commercial Debts (Interest) Act 1998, you're automatically entitled to:
- Statutory interest of 8% above the Bank of England base rate, and
- Fixed compensation of £40, £70, or £100 per invoice depending on its size — to cover your debt-recovery costs.
You don't need a clause in your contract to claim this; the right exists by default. Adding it to the conversation signals you know your rights and intend to use them.
Work out exactly what you're owed — including the correct base rate — with our free Late Payment Interest Calculator, and read the full guide to charging late payment interest for the detail.
Subject: Invoice [#1234] — statutory interest now applying
Hi [Name],
Invoice [#1234] for [£amount] is now [X] days overdue. As permitted under the Late Payment of Commercial Debts (Interest) Act 1998, statutory interest of 8% above the Bank of England base rate is now accruing, along with fixed compensation of [£40/£70/£100].
The current outstanding total is [£amount + interest + compensation]. Please settle in full by [date] to prevent further charges.
[Your name]
Step 5: The Letter Before Action (Final Warning)
Still nothing? A Letter Before Action (LBA) is your formal final demand before court — and it's often the message that finally gets you paid, because it signals you're genuinely prepared to escalate. Under the court's Pre-Action Protocol you're expected to send one before issuing a claim.
Send it by email and post. It should state:
- The exact amount owed (debt + interest + compensation)
- A clear final deadline (typically 14 days)
- That you will issue court proceedings without further notice if unpaid
Subject: LETTER BEFORE ACTION — Invoice [#1234]
Dear [Name],
Despite previous reminders, invoice [#1234] dated [date] for [£amount] remains unpaid. Including statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998, the total now outstanding is [£total].
This is a formal Letter Before Action. Unless payment is received in full within 14 days of the date of this letter, I will commence county court proceedings to recover the debt, interest, and costs without further notice.
I would prefer to resolve this without court action. Please contact me by [date] to arrange payment or discuss the matter.
Yours sincerely, [Your name]
Keep proof of postage. The seriousness of an LBA clears a large share of stubborn debts on its own.
Step 6: Money Claim Online / The Small Claims Court
If the deadline passes, you can make a claim through Money Claim Online (MCOL) for debts up to £100,000. Claims under £10,000 are handled via the small claims track — designed to be used without a solicitor.
The court fee scales with the debt (from around £35 for small sums up to a few hundred pounds for larger claims), and you can add that fee to your claim so the debtor pays it if you win. Because the debt is documented — invoice, reminders, LBA — these cases are usually straightforward, and many settle the moment the claim form lands.
If the debtor ignores the judgment, you have enforcement options: bailiffs, an attachment of earnings, or a charging order against their property.
Other Routes Worth Knowing
- Statutory demand — for undisputed debts of £750+ (companies) you can issue a statutory demand; ignored for 21 days, it can be grounds for winding-up or bankruptcy. Powerful, but heavy-handed — use with legal advice.
- Mediation — the free Small Claims Mediation Service can settle disputes faster and cheaper than a hearing.
- Debt recovery agencies — useful for larger or older debts, though they take a cut.
Prevention Beats Pursuit
The best chase is the one you never have to make. To cut late payments at the source:
- Invoice immediately — the longer you wait to bill, the longer you wait to be paid.
- Make paying easy — clear bank details, a payment link, or card options.
- Set shorter terms — 14 days is perfectly normal; 30 is not a law of nature.
- Run a weekly debtor check — five minutes scanning what's overdue stops small slips becoming big holes.
- Automate reminders — let software send the Step 1 nudge so it never slips your mind.
Know Exactly What You're Owed
Before you send that Step 4 email, get the numbers right. Our free Late Payment Interest Calculator works out the statutory interest and fixed compensation on any overdue invoice in seconds — no sign-up, no maths.
Other Free Tools for UK Businesses
We build free calculators and utilities for UK accountants, bookkeepers, and small business owners:
- Late Payment Calculator — Work out interest and compensation on overdue invoices
- VAT Calculator — Add or remove VAT at any rate
- HMRC Mileage Calculator — Calculate business mileage claims
- CIS Tax Calculator — Work out CIS deductions instantly
- Invoice Cost Calculator — See what manual invoice processing really costs you
- AI Invoice Importer — Extract invoice data with AI and push to Xero automatically
Spending hours every month on invoicing and chasing? Our AI Invoice Importer reads invoices, extracts the data, and pushes it straight into Xero — so you spend less time on admin and more time getting paid.
This article is general guidance, not legal advice. For significant or disputed debts, consult a solicitor.