What to Do When a Client Won't Pay (Step-by-Step)

What do you actually do when an invoice goes past due and the client stops responding?

The answer is almost never what the frustration in the moment suggests. A methodical, calm escalation — starting with the most charitable explanation and only turning up the heat when necessary — gets you paid faster and keeps more client relationships intact than an angry email ever does.

Start by Ruling Out the Boring Explanations

An overdue invoice feels personal. Most of the time it isn't. Before you draft anything strongly worded, work through the mundane reasons first, because they're usually the real ones.

The invoice went to a spam folder. It landed with the wrong person and never reached accounts payable. It's missing a purchase order number, so the client's system rejected it silently. The approver is on holiday. The payment run happens on the 25th and your invoice arrived on the 26th. None of these are malice — they are admin friction, and a single polite message usually clears them.

Your first move is a nudge that assumes good faith and makes it trivially easy to pay: restate the invoice number, the amount, the due date, and attach the PDF again.

The Escalation Ladder

Chasing payment works best as a series of calm, predictable steps that get firmer over time. Climb one rung at a time and keep a written record of every one. The record does two things: it nudges the client (people pay faster when they can see a paper trail forming) and it's the evidence you'll need if this ever reaches mediation or court.

For the exact wording at each stage, we have a full set of payment reminder email templates you can copy and adapt.

Pick Up the Phone

Somewhere between the firm reminder and the formal demand, call them. Email is easy to ignore; a polite, direct conversation is much harder to brush off, and it often surfaces the real blocker — "we never got the PO", "our terms are actually 45 days", "cash is tight, can we split it".

Keep the call friendly and solution-focused. Confirm the amount, ask if there's any issue with the work or the invoice, and agree a concrete payment date. Then follow up in writing the same day: "Thanks for the call, confirming you'll pay £X by date." Now the verbal promise is documented.

The Formal Demand

If polite chasing fails, escalate to a formal written demand. In the UK this is often called a "letter before action" or "letter before claim" — it signals that court is the next step if payment doesn't arrive. It should be unemotional and specific.

A demand letter should state: the invoice number(s) and amount, the original due date, a short history of the reminders you sent, the total now due including any interest, a firm final deadline (commonly 7–14 days), and a clear statement of what happens next if they miss it.

Keep it factual. No insults, no capital letters, no threats you won't carry out. A calm letter that lists dates and amounts reads as someone who is organised and will follow through, which is exactly the impression that gets you paid.

Send it by a method you can prove — email plus, for larger sums, recorded post. Rules and terminology differ by country, so if real money is at stake, it's worth a quick check with a solicitor or your local small-business advice service before you send a formal demand.

Interest and Late Fees

Often you can charge interest on overdue B2B invoices, but the rules depend on where you are and what your contract says.

In the UK, the Late Payment of Commercial Debts (Interest) Act 1998 gives businesses a statutory right to charge interest on overdue commercial invoices (commonly cited as 8% plus the Bank of England base rate) plus a fixed sum in compensation that rises with the size of the debt, even if your contract is silent on the matter. Our late payment interest calculator can estimate what an overdue invoice has run up. The exact rates and fixed sums change over time and the rules have conditions, so confirm the current figures on GOV.UK before you apply them.

In the US, Australia, Canada and elsewhere, late fees are generally governed by your contract and by local rules that may cap the interest rate. The practical lesson is the same everywhere: put a late-payment clause in your terms and on your invoice from day one, so the right to charge isn't a surprise. Our guide on charging late fees on overdue invoices walks through the wording.

This isn't legal advice. Interest rules, caps and the right to claim differ by country and can change. Check your local regulator or a solicitor before relying on a specific figure.

When Chasing Isn't Enough

If the demand deadline passes without payment, you have a few routes, roughly in order of cost and aggression:

• Mediation — a neutral third party helps you reach a settlement. Cheaper, faster and less relationship-destroying than court. Many small claims processes encourage or require it first.
• Debt recovery agency — they chase on your behalf for a fee or a cut of what they collect. Useful when you don't have the time or stomach for it, less so for small sums.
• Small claims court — for modest amounts this is designed to be used without a lawyer. England and Wales handle most claims up to £10,000 on the small claims track via Money Claim Online; US small claims limits vary by state; other countries have their own equivalents and thresholds.

Weigh the sum against the effort. For a £200 invoice, a formal claim may cost more in time and fees than it returns, and "write it off and never work with them again" is a legitimate business decision. For £5,000, it's usually worth pursuing.

Preventing the Next One

Most non-payment is preventable at the quoting stage, not the chasing stage. A few habits dramatically cut your odds of being stiffed:

• Take a deposit on larger jobs so you're never fully exposed — see how to ask for a deposit.
• Agree terms in writing before you start, including payment days and a late-fee clause.
• Invoice promptly and correctly — the right details, a PO number if they use them, a clear due date, and a clickable payment link.
• Stage the work for big projects: milestone invoices mean an early non-payer can be stopped before you've delivered everything.

A clean, complete invoice with a clear due date is your first line of defence. Build one in seconds with our free invoice generator, or start from a freelance invoice template.

Frequently Asked Questions

How long should I wait before chasing an unpaid invoice?

Send a friendly reminder a day or two after the due date passes. There's no benefit to waiting weeks — early, polite contact gets you paid faster and keeps the tone light.

Can I charge interest on a late invoice?

Often yes, particularly for business-to-business invoices, but it depends on your country and contract. UK businesses have a statutory right to claim interest and compensation on overdue commercial debts; elsewhere it's usually governed by your terms. Check the current rules for your jurisdiction before applying a figure.

What is a letter before action?

A formal written demand, common in the UK, that warns the debtor you intend to take court action if they don't pay by a stated deadline. It sets out the amount, the history, and the consequences in plain, factual terms.

Is it worth taking a client to small claims court?

Weigh the debt against the time, fees, and stress. For larger sums, small claims is designed to be usable without a lawyer and is often worthwhile. For very small amounts, writing it off and declining future work can be the better commercial call.