Overdue Invoices: How to Chase, Escalate and Get Paid

An overdue invoice is rarely a refusal to pay. Far more often it is an invoice sitting behind a missing purchase order number, a person on leave, or a payment run that happens on the 25th. The businesses that recover their money are not the most aggressive — they are the ones that work out which of those it is before deciding what to do.

This guide picks up where routine chasing stops. If you are still in the first fortnight, the reminder sequence and the wording for it live in the guide to invoice payment terms, and the interest you can add is covered in the guide to invoice late fees. What follows is everything after that.

What to do the day an invoice goes overdue

Before sending anything, spend two minutes checking your own side. A surprising share of "late" invoices were never actually payable:

• Did it arrive? Check it was sent to the right address, and that it did not land in a spam filter or a shared inbox nobody reads.
• Does it carry the reference they need? A missing purchase order number is the single most common reason an invoice stalls in a larger company, and nobody will tell you.
• Is it addressed to the right entity? Billing the trading name rather than the registered company can be enough for accounts payable to reject it.
• Are your bank details on it? Obvious, and it still happens.

If any of these are wrong, fix and reissue rather than chase. Chasing an invoice the client genuinely cannot pay damages your position when you later need to be firm about one they can.

One more thing to rule out before treating this as non-payment: if the client has actually questioned the invoice — the amount, the scope, the quality — that is a dispute rather than a debt, and it needs a completely different response. Our guide to invoice disputes covers that, including how to get the undisputed portion paid while you resolve the rest.

Diagnose before you escalate

Escalation only works if it is aimed at the actual obstacle. There are four common causes, and they need completely different responses.

The distinction between priority and distress matters more than any other judgement in this guide. Pressure works on the first and is counterproductive on the second — if a client genuinely has no money, the creditor who agrees a realistic instalment plan usually recovers far more than the one who spends months and legal fees obtaining a judgment against a company that then folds.

The escalation ladder

Each rung raises the cost of ignoring you. Do not skip rungs — a client who receives a legal threat before a phone call will dig in, and a court will later ask whether you gave them a fair chance to pay.

Days are from the due date. The first three rungs are covered in detail in the payment terms guide.

The phone call at day 21 is worth singling out. Email is easy to deprioritise; a polite call to a named person in accounts payable, asking specifically which payment run the invoice is in, resolves a large share of cases that emails did not. Follow it with a short email confirming what was agreed — that record is what makes the next rung credible.

Subject: Invoice [INV-2026-014] — confirming our call today

Hi [name],

Thanks for taking my call. Confirming what we agreed: invoice [INV-2026-014] for [2,065.00], including late payment interest, will be included in the payment run on [date].

If that date changes, please let me know before it passes rather than after.

[your name]

The formal demand, or letter before action

A letter before action is the last step before court. In some jurisdictions — England and Wales among them — sending one and allowing a reasonable period to respond is effectively expected before you issue a claim, and failing to do so can affect costs even if you win.

It needs to be unmistakably different from your previous emails: a distinct heading, the full history, a precise sum, a deadline, and a plain statement of what happens next.

LETTER BEFORE ACTION

[Your business name and address]
[Client company name and registered address]
[Date]

Dear [name],

Re: Unpaid invoice [INV-2026-014] — [2,065.00]

I supplied [description of goods or services] under our agreement dated [date]. Invoice [INV-2026-014] for [2,000.00] was issued on [date] and fell due on [date]. It remains unpaid.

The sum now outstanding is:

  Invoice principal        2,000.00
  Interest to date            65.00
  ------------------------------
  Total due                2,065.00

I have contacted you regarding this invoice on [dates]. No payment has been received and no substantive explanation has been given.

Unless payment of 2,065.00 is received in cleared funds by [date, 14 days from this letter], I will commence court proceedings to recover the debt without further notice. I will also seek interest, court fees and any recoverable costs.

If you dispute this debt, set out the basis of your dispute in writing by the same date.

I would prefer to resolve this without proceedings, and remain willing to discuss a payment plan if you tell me what is achievable.

Yours sincerely,
[your name]

Note the last paragraph. Offering to discuss a payment plan costs nothing, reads as reasonable to a judge, and quite often produces payment from a client who was avoiding you because they had no good news to give.

Legal routes: small claims and beyond

Small claims procedures exist precisely for debts of this size: simplified, designed to be used without a solicitor, and comparatively cheap. The thresholds vary widely.

Approximate small claims limits. Thresholds and fees change — check the current figures before filing.

Three things decide whether this is worth doing:

• Can they pay? A judgment against a company with no assets is a piece of paper. Check whether they are still trading and whether accounts are filed before you spend anything.
• Is your paperwork sound? A signed contract or accepted quote, the invoice, and a record of your chasing will usually carry a straightforward debt claim. Work agreed only verbally is much harder.
• Is the sum worth the time? Court fees are usually recoverable; your own hours are not. Below a certain figure, writing it off and tightening your terms is the rational choice.

Winning is also not the same as being paid. Enforcement — bailiffs, attachment of earnings, charging orders — is a further step with further costs, and is the stage where claimants most often discover the debtor has nothing to take.

Debt collection agencies: cost and trade-offs

A collections agency takes the chasing off your desk in exchange for a share of what it recovers, typically somewhere between 10% and 30% on a no-win-no-fee basis, with higher percentages on older or smaller debts.

Understand that handing a debt to an agency generally ends the client relationship. That is usually an acceptable price by the time you are considering it, but decide deliberately rather than as an act of frustration.

When to write it off

Writing off a bad debt is a legitimate business decision, not an admission of failure. It is usually right when the client has ceased trading with no assets, when the sum is smaller than the cost of pursuing it, when the work was never properly documented, or when the time is doing more damage than the money.

Do it properly rather than by simply giving up: record the write-off in your accounts, since a genuinely irrecoverable trade debt is normally deductible and you may be able to reclaim tax paid on the sale. Keep the paper trail — if the client resurfaces or is later pursued by others, you will want the history. And close the account so you are not silently carrying an open balance that distorts your figures.

Making it less likely next time

Every unpaid invoice is worth one honest look backwards. Usually the failure was upstream of the chasing:

• Take a deposit. The single most effective change. A client who has paid something is materially more likely to pay the rest, and you are never exposed for the full amount.
• Bill in stages. Milestones cap your exposure and surface a payment problem early, while you still hold work they want.
• Check new clients. For anything substantial, a company search showing filed accounts and no winding-up activity takes minutes.
• Get the PO number before you invoice. Ask during onboarding, not after the invoice stalls.
• Invoice immediately. An invoice sent two weeks after delivery has already consumed two weeks of your terms — create and send it free the day the work lands.
• Enforce the first small slip. How you handle a client's first late payment sets the pattern for every one after it.

This is general information, not legal advice. Debt recovery procedure, limitation periods and pre-action requirements vary by jurisdiction — take advice before issuing proceedings.