How to chase unpaid invoices in the UK

To chase an unpaid invoice in the UK, remind the customer in writing the day after it falls due, keep reminding on fixed days, answer any query quickly, then send a final letter that names a deadline and what happens after it. If the customer is a business, the law lets you add statutory interest and a fixed sum for the cost of recovery. If the customer is a consumer, it does not.

How to chase an unpaid invoice, step by step

1. Make the invoice easy to pay. Put the due date, the customer's purchase order number and how to pay on it. Where no payment date was agreed with a business customer, GOV.UK says payment is late 30 days after the customer gets the invoice, or after you deliver, if that is later.

2. Remind the day after the due date, with the invoice attached and the ways to pay.

3. Keep to a rhythm. For example, a second reminder a week later, a third a fortnight after that, and a statement at month end. Set the days once and keep to them in a busy month too.

4. Read every reply the day it arrives. A promise to pay gets a date in your records and a check of the ledger on that date. A query about the work goes to the person who did it.

5. Phone before the final letter. A call can find an invoice sitting with the wrong person.

6. Send a final letter stating the amount, how it is calculated, the date you want payment by and what you will do if it does not come.

7. Decide the next step: agree time to pay, pass the debt to a collection agency, make a court claim or write it off.

Can I charge interest on a late invoice?

Yes, if your customer is a business, unless your contract gives its own substantial remedy for late payment. The Late Payment of Commercial Debts (Interest) Act 1998 covers contracts for goods or services where buyer and supplier are each acting in the course of a business, and makes a late debt carry simple interest. GOV.UK puts this statutory interest at 8% plus the Bank of England base rate. In England, Wales and Northern Ireland the base rate used is the one in force on 30 June or 31 December before the interest starts, and the rate then holds for that debt. GOV.UK says to send a new invoice if you decide to add interest.

You can also charge a fixed sum for the cost of recovery, once for each payment: £40 for a debt up to £999.99, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more. Where your reasonable recovery costs are higher, the Act lets you claim the difference.

What changes when the customer is a consumer

The Act's interest and fixed sums do not apply to a consumer, because both sides must be acting in the course of a business. A sole trader buying for their business is a business customer under the Act, but the court process treats them as an individual: in England and Wales, before taking any individual to court, a business is expected to follow the Pre-Action Protocol for Debt Claims: a Letter of Claim by post, with the protocol's Information Sheet, Reply Form and a Financial Statement form, and 30 days for a reply. A customer getting debt advice is allowed a reasonable time for it, and where they ask for time to pay, both sides try to agree instalments. If the claim reaches court, GOV.UK says interest on debts other than late commercial payments is usually 8%.

What if the customer disputes the invoice?

Stop reminding on the part in dispute and set out in writing what the customer says is wrong and what your records show. In England and Wales, with a business customer other than a sole trader, the court's practice direction on pre-action conduct usually expects you to set out the claim, its basis and how the amount is calculated, and the customer to reply within a reasonable time, 14 days in a straightforward case. Once a county court claim is made in England and Wales, a defended claim of £10,000 or less goes to the court's free mediation.

How do I take an unpaid invoice to court?

In England and Wales you claim from a person or business through the county court, online through GOV.UK's money claim service unless an exception applies, such as a customer with no address in England or Wales. The fee depends on the amount claimed plus interest, and you may be able to claim it back if you win. No claim can be made against someone protected by the Breathing Space scheme. Scotland and Northern Ireland have their own processes.

What stays with a person

• Whether to charge interest and the fixed sum on a given account.

• Stopping supply, using a collection agency and going to court.

• Every dispute, and any credit note that settles one.

• A customer in difficulty: time to pay, an instalment plan, a pause while they get advice.

• The phone calls, and any request to change bank or account details.

Can AI chase invoices for me?

An AI worker can take on the written part of the job: each reminder sent on the day your schedule sets, in wording you have approved, and a statement at month end. It can also read every reply, send a copy invoice when asked, log each promise to pay and check the ledger on the promised date. For a business customer it can work out the interest and fixed sum the law allows, for you to decide on, and draft the final letter for a person to approve. How the model works is set out in what AI staff are. The invoice and payment chasing role sets out the specification, and what a credit controller costs to hire sets out what employing someone for the job would cost. Law firms have SRA rules to follow too, covered in how to chase unpaid fees in a law firm.

An AI worker could send the reminders on your schedule, log every promise to pay and work out the interest on a business customer's debt for you to decide on, while disputes, phone calls and any step towards court stay with a person. Talk to our agent about the invoices that only get chased in a quiet week.