How to chase an unpaid invoice (with a late payment letter template)

You did the work, you sent the invoice, and now nothing. Late payment is one of the most common and most stressful parts of running a trade business, but you have more rights than you might think, and most of it is preventable. Here is a calm, effective way to chase what you are owed.

Chase early, chase politely, chase in writing

A lot of late payment is simple forgetfulness, so a friendly nudge often does the job. A short message a day or two before the due date, then again just after if nothing arrives, keeps your invoice on the customer's radar without any bad feeling. Keep every reminder in writing, by text or email, so you have a clear record if things escalate.

If the polite reminders are ignored, become firmer and clearer. State the amount, the original due date, how overdue it now is, and what happens next. Most disputes are settled well before they get serious, but only if you keep following up rather than letting the debt drift.

Know your legal rights

When your customer is another business, the Late Payment of Commercial Debts (Interest) Act 1998 is on your side. You are entitled to charge statutory interest of 8% above the Bank of England base rate on an overdue commercial invoice, plus fixed compensation for the cost of chasing: £40 for debts under £1,000, £70 for debts up to £10,000, and £100 above that. You can apply this even if it was not written into your terms, though it is cleaner if it was.

When your customer is a private household, that Act does not apply, but you can still set out your own late payment charges in your terms and enforce the debt through the courts if it comes to that.

A late payment letter template

If reminders fail, send a final written request that makes clear it is your last before further action. This is sometimes called a letter before action. Keep it factual and firm:

• State the invoice number, the amount, and the original due date

• Note the reminders you have already sent

• Give a clear final deadline, for example 7 days, to pay in full

• State that if payment is not received you will begin a claim through the courts, and (for business customers) apply statutory interest and compensation

• Keep a dated copy

Many customers who ignored months of reminders pay up the moment a formal letter before action arrives, because it shows you are serious.

When to escalate

If the letter before action is ignored, a claim through Money Claim Online is the usual next step for a straightforward debt. It is designed to be used without a solicitor, and often the arrival of a court claim is enough to prompt payment on its own.

Related guides

• The late payment rules every UK tradesperson should know

• A free invoice template for tradespeople

• Quote jobs faster and get paid sooner

Clear quotes, prompt invoices and steady reminders get the vast majority of your money in on time without ever needing the legal route, and that is exactly what TradePilot is being built to help UK trades do. Join the waiting list and we will let you know the moment it launches.