What Should I Do if a Customer Does Not Pay an Invoice?

If a customer does not pay your UK company's invoice by the agreed due date, contact them promptly, confirm there is no dispute or administrative problem, send a formal reminder and consider further debt-recovery action if payment remains outstanding.

For qualifying business-to-business debts, your company may also be entitled to statutory interest and debt-recovery costs.

1. Check the Invoice and Payment Terms

First, confirm:

• The invoice was sent to the correct person
• The amount is correct
• The due date has passed
• The correct purchase order was included, if required
• Your payment details are correct
• The customer has not raised a genuine dispute

If no payment date was agreed, payment generally becomes late 30 days after the customer receives the invoice or the goods/services, whichever is later.

2. Send a Payment Reminder

Contact the customer as soon as the invoice becomes overdue.

Include:

Invoice: INV-001
Amount due: £5,000
Original due date: 1 September
Status: Overdue

Attach the invoice again and ask when payment will be made.

The Small Business Commissioner recommends starting with a polite reminder and then contacting the customer directly if payment is still not received.

3. Send a Final Payment Demand

If reminders are ignored, send a more formal demand stating:

Amount outstanding → Original due date → New deadline for payment → Possible interest/recovery costs → Further action if unpaid

Keep copies of all emails, invoices and correspondence.

4. Can You Charge Interest?

For qualifying B2B transactions, statutory interest is generally:

8% + Bank of England base rate

However, statutory interest generally cannot be claimed if your contract provides a different rate of interest.

5. Can You Charge Debt-Recovery Costs?

For qualifying late commercial payments, you may also be able to claim a fixed recovery amount:

Outstanding debtRecovery chargeUp to £999.99£40£1,000–£9,999.99£70£10,000+£100

These amounts can be claimed in addition to applicable statutory interest.

6. Consider a Payment Plan

If the customer accepts that the money is owed but is experiencing temporary cash-flow problems, you could agree instalments.

For example:

£6,000 outstanding → £2,000 now → £2,000 next month → £2,000 final payment

Put any new arrangement in writing.

7. Consider Debt Recovery or Legal Action

If the customer continues to refuse or ignore payment, options can include using a debt-collection service or making a court claim.

Before taking legal action, consider the amount owed, likelihood of recovery, legal costs and whether the customer is financially capable of paying.

GOV.UK guidance on recovering money owed

Small UK businesses with unresolved payment disputes involving larger customers may also be able to obtain free assistance from the Office of the Small Business Commissioner.

How Can You Prevent Unpaid Invoices?

Reduce the risk by setting clear payment terms before starting work. For new or higher-risk customers, consider:

Payment upfront → Deposit → Milestone payments → Shorter payment terms

Also put an exact payment due date on every invoice.

Final Answer

If a customer does not pay your UK company's invoice:

Check the invoice → Send a reminder → Contact the customer → Send a final demand → Consider interest and recovery costs → Consider a payment plan → Escalate to debt recovery or legal action if necessary.

The earlier you follow up on overdue invoices, the easier it is to identify administrative problems or payment disputes before the debt becomes significantly overdue.

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