A late invoice hurts small business cash flow when unpaid work delays payroll or supplier bills. Many business owners send an unfocused email reminder, wait several days, and then compose an emotional message. That approach rarely secures a confirmed payment commitment.
A disciplined payment chase starts with clear records. You need to know what the customer owes, which credit terms apply, and how to claim legal late fees. This guide shows how to chase an overdue invoice over seven working days and how to charge late payment fees.
Keep every communication professional, concise, and firmly grounded in agreed commercial terms.
This guide gives general business facts, not legal advice. Contract rules and local laws differ. Speak with a solicitor or legal expert before you start formal court action.
Before day one: verify that the invoice is ready for payment
Before you email the client, check the signed agreement, purchase order, delivery note, and bill. Check the legal name, billing address, invoice number, bank details, and payment due date. Make sure the bill reached the right inbox and met any client portal rules.
Ask yourself if the client is waiting for any piece of work from your team. A missing timesheet or sign-off form can halt pay runs in finance teams even when work is good.
The U.S. Small Business Administration lists accounts receivable tracking and bank reconciliations among key finance tasks. Treat debt collection as a calm business routine rather than a personal fight.
Day 1: send a short fact-check note
Email the main project lead and copy accounts payable. Put the invoice number and due date in the subject line. Attach a copy of the bill and delivery note.
State plainly that the bill is now overdue. Ask the client to confirm receipt and give the date for the bank run. Ask for an answer by 3 p.m. the next working day.
That deadline gives the client an easy prompt to reply.
Day 2: phone the finance desk directly
If no email arrives by Day 2, pick up the phone. The person who hired you may like your work, but they may not control cash payouts. Ask to speak to the clerk who handles the supplier ledger.
Check if the bill has full sign-off and if any invoice detail needs a fix. Note down names, dates, and promised payment runs.
Send a quick email summary right after the call. Writing down terms prevents mixed messages later.
Day 3: find the real reason for the delay
Unpaid bills usually stem from one of four causes:
- Process delay: The bill is approved but sits in a scheduled weekly payment run.
- Missing form: The client needs a vendor form, tax number, or corrected job code.
- Work dispute: The client questions hours, scope, price, or quality.
- Cash shortage: The client is short on cash and cannot pay in full today.
Fix missing forms on the spot. If there is a debate on scope, set up a call with the project team. If the client has a cash problem, do not just wait. Agree on an installment plan in writing with firm weekly dates.
Add the new receipt dates to your four-week cash-flow forecast so your bank buffer stays accurate.
Day 4: calculate statutory late fees and send a clean statement
When an invoice stays unpaid without a valid dispute, send an updated statement of account. Add statutory late charges to the balance. Under the UK Late Payment of Commercial Debts Act, businesses have a right to charge interest and debt costs on late trade bills.
According to official UK guidance on late commercial payments, statutory interest runs at 8% plus the Bank of England reference rate. You can also claim fixed compensation based on bill size.
| Invoice Amount (Debt Size) | Statutory Compensation Fee | Statutory Interest Rate Formula |
|---|---|---|
| Up to £999.99 | £40.00 | 8% + Bank of England base rate per annum |
| £1,000.00 to £9,999.99 | £70.00 | 8% + Bank of England base rate per annum |
| £10,000.00 or more | £100.00 | 8% + Bank of England base rate per annum |
To find daily interest, multiply the debt by the yearly interest rate, divide by 365 days, and multiply by the days overdue. For example, take an overdue £5,000 bill with a 12.5% rate (8% statutory plus 4.5% base rate). Daily interest equals £1.71. At 30 days overdue, statutory interest totals £51.37, plus the £70 fixed compensation fee.
Day 5: move the issue to senior leaders
If finance staff will not release funds, take the issue to leaders on both sides. Prepare a one-page summary showing the contract, purchase order, work proof, past emails, and total debt with added fees.
A senior manager can bypass team bottlenecks or approve an off-cycle payment. Keep your tone level and stick to the paper trail.
When you look at slow-paying clients, check your broader risk against our guide on customer concentration risk.
Day 6: review whether to pause ongoing work
Read your contract terms on pausing service. If your agreement lets you halt work for non-payment, send written notice stating the day and time work will stop.
Give fair notice, such as 24 or 48 hours, so the client has one last chance to clear the bill. Pausing work stops you from piling up more unbilled costs.
Keep customer data and completed files safe so you avoid counterclaims.
Day 7: begin formal debt recovery
If informal steps bring no cash, move to formal debt recovery. Issue a formal Letter Before Action. Give seven days to settle the full debt plus interest and fees before you file a court claim or hire a recovery agency.
UK businesses should note that the UK government published factsheets on the Commercial Payments Bill to address poor payment practices. Check current rules when you start formal recovery.
Make sure your standard onboarding uses our UK Commercial Payments Bill contract checklist.
Preventing future overdue invoices
Once you get paid, see what caused the hitch. Ask for upfront deposits or milestone fees on big projects. Put short terms like 14 or 30 days on all quotes.
Use our guide on payment terms that protect small business cash flow to add deposit rules and automatic late fee terms to your quotes.
Setting credit limits and tracking payment delays protects your cash before unpaid work puts your business at risk.
Frequently asked questions
When should I chase an overdue invoice?
Check the invoice first, then contact the client the business day after the due date passes. A quick reminder confirms whether payment is already in the banking queue.
Can a business charge late fees and interest on overdue invoices?
Yes. In the UK, commercial rules let you charge interest of 8% plus the Bank of England base rate, plus fixed sums of £40, £70, or £100 per bill.
Should I stop work for a late-paying customer?
Check your contract first. If the deal allows a pause for non-payment, give clear written notice with the exact date when service will stop.
How do I calculate UK statutory late payment interest?
Multiply the debt by the total interest rate, divide by 365, and multiply by the days overdue.