Unpaid Invoice Recovery: How to Get an Overdue Business Invoice Paid in the UK

Unpaid invoice recovery is the process of getting an overdue business invoice paid, from the first reminder to a formal demand and, if needed, court action. The steps are the same for every invoice, but the details are not. The invoice itself, the interest on it and the evidence behind it each decide how strong your position is.

This guide works through unpaid invoice recovery one invoice at a time. It covers how to check the invoice, what to do if part of it is disputed, how to claim interest and fixed sums on each invoice, how a letter before action works, and where a statutory demand or a court claim fit. It is written for business owners in Manchester and across the UK who are owed money by another business.

Check the Invoice Before You Chase It

Start with the invoice, because a customer looking for a reason not to pay will look there first. Check that it names the right customer, using the registered company name rather than a trading name, and that the amount, VAT and due date are correct. If the customer issues purchase order numbers, make sure the invoice quotes them. An invoice that cannot be matched to a purchase order is one of the commonest causes of delay.

Then gather the evidence behind it: the contract or order, proof of delivery or acceptance, and any messages about payment. Written agreements are far easier to prove than verbal ones. Keep everything for each invoice together, because interest, fixed sums and any later claim are all worked out invoice by invoice. Our guide to B2B debt recovery explains what to do when clients stop paying.

What If Only Part of the Invoice Is Disputed?

A customer who disputes part of an invoice should still pay the rest. Ask for the reason in writing and ask them to pay the undisputed amount straight away. Record the dispute, including the date it was raised, what is disputed and why. If the disputed part is small, a short negotiation or a credit note may be quicker than a fight. Our commercial disputes advice covers the options for a contested invoice.

The distinction matters later. A statutory demand only works on a debt that is undisputed, and you cannot charge statutory interest on an invoice that was paid late because of a genuine dispute. Keep the disputed and undisputed amounts separate in your records and in any letter you send.

Reminders and Payment Plans

Most overdue invoices are not refusals. A short reminder on the day after the due date, followed by a call, settles many of them. If the customer cannot pay in full, agree a payment plan in writing, with the amounts, the dates and what happens if one is missed. Keep a note of every contact, because it is useful if the matter goes further. Our debt recovery for small business guide sets out the full sequence.

Unpaid Invoice Recovery: Interest and Fixed Sums on Each Invoice

Where the customer is another business, the Late Payment of Commercial Debts (Interest) Act 1998 lets you claim statutory interest at 8% above the Bank of England base rate in force on the previous 30 June or 31 December, depending on when interest starts. You can also claim a fixed sum for each late invoice: £40 for debts up to £999.99, £70 for debts from £1,000 to £9,999.99 and £100 for debts of £10,000 or more. If your terms give a substantial remedy for late payment, that may apply instead, so check them first.

The fixed sum is charged on each invoice, not on the total owed. Take three invoices of £800, £4,500 and £12,000, all due on 1 August 2026 and paid on 31 August, which is 30 days late. Interest starts on 2 August, so the reference rate is the 3.75% base rate on 30 June 2026 and the statutory rate is 11.75%. Interest comes to £7.73, £43.46 and £115.89, which is £167.08 in total. The fixed sums are £40, £70 and £100, which is £210. The total claim is £377.08 on top of the three invoices.

Send a new invoice for the interest and the fixed sums, referring to the original invoice numbers, and show your working so the customer can check it. Our guide to a terms of business agreement explains how to set late payment terms that preserve this right.

Send a Letter Before Action

If reminders fail, send a letter before action. It sets out each invoice, the interest and a deadline, and it warns that you will start court proceedings if the invoices are not paid. Courts expect this step and skipping it can affect who pays the costs even if you win.

Which rules apply depends on who owes you. Where the debtor is an individual or sole trader, the Pre-Action Protocol for Debt Claims is the starting point, with 30 days to respond. Where the debtor is a company, LLP or partnership, the Practice Direction on Pre-Action Conduct and Protocols applies, which expects a clear letter and a reasonable time to reply. Many creditors allow 14 days for a straightforward invoice.

Statutory Demand or Court Claim for an Unpaid Invoice?

Where the invoice is undisputed, a statutory demand is one route. It gives the debtor 21 days to pay or agree terms before you can apply to bankrupt an individual who owes £5,000 or more, or to wind up a company that owes £750 or more. It is the wrong tool for a genuinely disputed invoice, and a demand served with no intention of going further can be treated as an abuse of process.

A court claim is how a disputed or ignored invoice is decided. After the claim is served, the defendant usually has 14 days to respond, or 28 days to file a defence if they acknowledge it. If they do nothing, you can ask for judgment in default. Issuing a claim, applying for a petition and enforcing a judgment are all work for appropriately regulated litigation professionals, not for MAR Legal.

After Judgment: Enforcement

A judgment is not payment. If the debtor still does not pay, the options include warrants or writs of control, charging orders and third-party debt orders. A county court warrant of control can recover up to £5,000, and a judgment of £600 or more can be transferred to the High Court for enforcement by a High Court Enforcement Officer. Since 1 May 2026, enforcement agents must give 14 clear days’ notice before taking control of goods. Check whether the debtor has assets that justify the cost before you commit.

Time Limits

Most unpaid invoices can only be pursued in court within six years under the Limitation Act 1980, usually counted from the date payment fell due. A letter does not stop the clock, but issuing a claim does. A signed written acknowledgement or a part payment can restart a period that is still running.

Writing Off an Invoice and VAT Bad Debt Relief

Sometimes the right answer is to stop. If you decide an invoice is not worth pursuing, record why. You may be able to reclaim the VAT you paid to HMRC on the invoice through VAT bad debt relief. HMRC’s conditions include that the debt is more than six months old, has been written off in your bad debt records and that you have already accounted for and paid the VAT. If you recover the money later, you will need to repay the VAT. This is a tax matter, so check the rules with your accountant.

What a Lawyer Does at Each Stage

• Evidence: reviewing the contract, invoices and any dispute to judge how strong your position is.

• Calculation: working out interest and fixed sums for each invoice.

• Formal demand: drafting the letter before action under the right pre-action rules.

• Escalation: advising whether a statutory demand fits and what it risks.

• Settlement: negotiating a payment plan and recording it in writing.

Court proceedings and enforcement sit with appropriately regulated litigation professionals, and we explain what that stage is likely to cost before you decide.

Final Thought

Unpaid invoice recovery is won invoice by invoice. Check each invoice, keep the evidence together, claim interest and fixed sums where you can, and weigh each next step against what you are likely to recover. Most invoices are settled long before a court is involved.