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What to do when a client won't pay an invoice (UK steps up to small claims)

Updated 16 October 2026 · Sources: GOV.UK, legislation.gov.uk

You did the work, sent the invoice and heard nothing, or you got excuses. It's stressful, especially when you're a freelancer and one unpaid invoice can wreck your month. The good news is that UK businesses have clear, affordable options. Here's a step-by-step plan, from the first reminder to a small claim in the county court.

Step 1: Make sure the invoice is valid and received

Before escalating, rule out admin problems. Check that the invoice went to the right person and has everything their accounts team needs, such as a PO number, your bank details and the correct company name. Then confirm the due date. If none was agreed, the legal default is 30 days after the client received the invoice or the work, whichever is later (GOV.UK).

Step 2: Send staged reminders

Escalate gradually:

• 1 day overdue: a friendly reminder
• 7 days overdue: a firmer email mentioning your right to statutory interest
• 14 days overdue: a formal notice stating the interest and compensation owed

Free wording for each stage is in our overdue invoice email templates. A phone call between emails also helps.

Step 3: Add statutory interest and compensation

For business-to-business debts, the Late Payment of Commercial Debts (Interest) Act 1998 lets you claim interest at 8% plus the Bank of England reference rate, currently 11.75% a year in total. You can also claim fixed compensation of £40, £70 or £100 depending on the debt size. Adding these often prompts payment, because the bill now grows every day. Use the calculator to see what you can claim:

More detail: how to charge late payment interest and the £40/£70/£100 explainer.

Step 4: Find out why they aren't paying

If the client replies with a reason, take it seriously.

• A genuine dispute about the quality or scope of the work is best resolved by talking. Offer to fix the issue or agree a partial payment.
• Cash-flow problems? Offer a written payment plan. Getting paid in instalments is better than chasing an insolvent company.
• No reason at all? Then move to formal action.

Step 5: Send a letter before action

A letter before action (also called a letter before claim) is a final formal demand. It should state:

• who you are and who owes the money
• the invoices, amounts and due dates
• the interest and compensation claimed
• a deadline to pay, and that you will start court proceedings without further notice if they don't

If the debtor is a business, a reasonable deadline is commonly 14 days. If they're a sole trader or individual, the Pre-Action Protocol for Debt Claims applies, and you must give them 30 days and include specific documents, including an information sheet and reply form. Courts expect you to follow the pre-action rules. If you don't, it can affect the costs you recover.

Step 6: Consider mediation

Courts encourage parties to try to settle. Free or low-cost mediation is available for many small claims. In England and Wales, the court's Small Claims Mediation Service is offered once a defended claim is allocated to the small claims track, and for many claims it is now a required step. It's quicker and cheaper than a hearing and keeps things civil.

Step 7: Make a court claim

If the client still won't pay, you can start a claim. In England and Wales, you can do this online through Money Claim Online on GOV.UK for fixed amounts. Claims of up to £10,000 are normally dealt with on the small claims track, which is designed for people without lawyers. Hearings are informal, and each side generally pays its own legal costs.

What to know:

• Court fees depend on the amount claimed and are added to the debt you claim. Check the current fees on GOV.UK.
• Include statutory interest and compensation in your claim, with the calculation.
• If the client doesn't respond, you can ask for a default judgment.
• If they defend, the case may go to mediation or a hearing.

Scotland and Northern Ireland have their own procedures. In Scotland, small claims go through the "simple procedure". Check the rules for where your client is based.

Step 8: Enforce the judgment

Winning a judgment doesn't automatically mean you get paid. If the client still doesn't pay, you can ask the court to enforce it. Options include sending enforcement agents, taking money from the debtor's bank account (a third-party debt order) or a charging order on property. Each has a fee. A county court judgment (CCJ) that stays unpaid also goes on the debtor's credit record, which motivates many businesses to settle.

Other options

• Statutory demand: for undisputed debts over £750 owed by a company, a statutory demand can be a step towards winding-up. It's serious, so use it carefully and consider legal advice.
• Debt collection agency: they take a cut but do the chasing.
• Solicitor's letter: often effective for larger debts.

Prevention for next time

• Agree payment terms in writing before you start work.
• Take deposits or staged payments on larger projects.
• Invoice promptly and chase consistently.
• Mention your late payment rights in your terms.

Make chasing automatic

Most debts never need to go to court if you chase early and consistently. LatePay UK does that for you, with reminders at 1, 7 and 14 days, automatic statutory interest and compensation, and a formal letter ready when you need it.

General information, not legal advice. For complex or large disputes, speak to a solicitor or Citizens Advice. Source: [GOV.UK](https://www.gov.uk/late-commercial-payments-interest-debt-recovery).