Late Payment: What to Do When Clients Don't Pay

The Scale of the Problem

According to research by the Federation of Small Businesses, late payment costs the UK's small businesses billions each year and is a leading cause of cash flow problems. As a freelancer, a single large overdue invoice can put significant pressure on your finances. Knowing your rights and having a clear escalation process reduces stress and improves outcomes.

Step 1: Start With a Friendly Reminder

Before assuming the worst, send a polite reminder email one to three days after the due date. Many late payments are the result of administrative errors — the invoice went to the wrong person, got lost in a spam filter, or simply slipped through the cracks.

Your email should be brief and professional: reference the invoice number and amount, confirm the due date has passed, and include your payment details again. Don't apologise for chasing — you're entirely within your rights.

Step 2: Follow Up by Phone

If your email gets no response within 3–5 business days, call the accounts payable department (or the person who commissioned your work, if it's a small business). A phone call often resolves what emails don't — you can find out whether there's a specific problem, who has approved payment, and when you can expect it.

Step 3: Send a Formal Letter Before Action

If payment is still outstanding after 2–3 weeks beyond the due date, send a more formal communication stating that you intend to charge statutory interest and may pursue the debt through the courts if payment is not received within 7–14 days. This demonstrates seriousness without immediately escalating.

Your Legal Rights: The Late Payment Act

The Late Payment of Commercial Debts (Interest) Act 1998 gives you the right to charge:

Statutory interest at 8% above the Bank of England base rate, from the day after payment was due
Debt recovery costs: £40 for debts under £1,000; £70 for debts of £1,000–£9,999; £100 for larger debts

You can include this in your invoice notes from the outset: "Late payments may incur statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998." This sets expectations clearly.

Step 4: Small Claims Court

For debts up to £10,000, you can issue a claim through the County Court Money Claims Centre online (moneyclaims.service.gov.uk). The process is designed for individuals, costs are modest (from around £35 for small claims), and you don't need a lawyer. Many debtors pay up as soon as they receive a claim, rather than going through court.

Step 5: Debt Collection Agency

A debt collection agency will pursue the debt on your behalf, usually taking a percentage (20–40%) of what they recover. This is appropriate for larger debts or where court action feels disproportionate. Choose a reputable agency that is a member of the Credit Services Association.

Preventative Measures

The best approach to late payment is structural prevention:

Agree payment terms in writing before starting work
Consider requesting a deposit (25–50%) upfront for new clients or large projects
Send invoices promptly and make payment easy (include bank details, or a payment link)
Follow up automatically — set reminders to chase at 7 days overdue, 14 days, and 30 days
Check new clients' credit rating or Companies House filing history before starting major work