How to respond to unpaid invoices: from first steps to last resort

Unpaid Invoices

Whatever the size of your company, unpaid invoices can upset your cash flow. Unfortunately, it's a common problem, with a 2016 study finding only 19% of UK-based freelancers or sole-traders had most of their invoices paid on time. Aside from persistent calls to your customer's finance department, what can you do about late payments?

Start negotiating 

Open up a dialogue with your client yourself. If this is unsuccessful, you can hire a neutral third-party mediator. They'll help you work out a solution – such as a payment plan – with signed documents to back it up. If you decide to use a mediator, you should be able to split the cost. 

Lodge a complaint with the Small Business Commissioner

Impartial, free and independent, the Small Business Commissioner (SBC) will investigate your claim. However, they can only help if your business has 50 employees or fewer. It's important that you have evidence to show you've tried to resolve the unpaid invoice issue yourself and that the missed payment was within the past year.

Take legal action

Start by checking your client has the means to pay – you can do this yourself or ask a certificated enforcement agency like Dukes to look into it. If your client is insolvent, it's unlikely legal action to pursue unpaid invoices will help, so it is important to investigate this before proceeding. Next, ask a solicitor to send a letter on your behalf. If that doesn't incentivise them to pay, it may be time to take them to County Court.

Engage a third-party debt collector

As well as relieving some of the stress, using a third party to chase your client for unpaid invoices increases the likelihood of them paying. In our experience, 90% of debtors are more likely to settle when a debt-collection service is involved. If you keep working with them, they're also less likely to pay late in future.

At Duke's, we have over 26 years' experience in collecting unpaid invoice debt across a range of companies – from startups to blue chips. Find out more about how we collect unpaid invoices.