An overdue invoice is one of the most stressful parts of freelancing, but a calm, step-by-step process resolves most unpaid bills without damaging the client relationship. This guide walks you through what to do when a client does not pay: when an invoice is officially overdue, the reminders to send (see our invoice chasing email templates for copy-paste wording), the interest and compensation UK law lets you charge, and how to escalate if nothing works. A statement of account template that lists every outstanding invoice, its due date and the total owed is a useful enclosure with the first reminder.
When is an invoice officially overdue?
An invoice is overdue the day after the agreed payment due date. If no due date was agreed, UK law treats a business-to-business invoice as overdue 30 days after the invoice was issued or the work was completed, whichever is later, under the Late Payment of Commercial Debts (Interest) Act 1998.
This matters because your rights to charge interest start from that date. Check the invoice itself first. If you wrote “due on receipt” or “Net 14”, that date is the line. If you wrote nothing at all, the default 30-day rule applies, and most payment disputes come down to this point being unclear.
Tip: Before chasing anyone, confirm the invoice actually reached the right person. A surprisingly common cause of “non-payment” is an invoice sent to an old email address or a former contact. Ask for confirmation of receipt before you send anything firmer.
What should you do first when a client does not pay?
Start with the assumption that something went wrong rather than that the client is dodging you. Most late payments are caused by admin delays, an approver on holiday, or the invoice sitting in the wrong inbox. A polite first reminder typically recovers the money faster than an aggressive one.
Follow this sequence, giving each step a few working days before moving on:
- Day 1-3 overdue: Send a friendly reminder. Reference the invoice number, amount, and due date. Attach the invoice again so the client has everything in one email.
- Day 7-10 overdue: Follow up once more, this time asking directly when payment will be made. Give a specific date you expect it by.
- Day 14+ overdue: Make a phone call. Email is easy to ignore; a calm call to the accounts department is much harder to park.
- Day 30+ overdue: Send a formal late payment notice mentioning statutory interest and fixed compensation under UK law. This is where the legal rights below start doing the heavy lifting.
Watch out: Never threaten legal action you do not intend to take. Empty threats destroy your credibility, and if the dispute ever reaches court, a judge will look at the paper trail. Keep every message professional and factual.
Can you charge interest on an overdue invoice?
Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, any business invoicing another UK business is automatically entitled to charge statutory interest on late payments, plus fixed compensation per invoice. You do not need a late payment clause in your contract for this right to exist.
The statutory interest rate is 8 percentage points above the Bank of England base rate. The base rate was 3.75% as of October 2026, making the current statutory rate 11.75% a year. Interest accrues daily from the day after the due date and is simple interest, not compound.
On top of interest, you can claim a fixed compensation sum for each overdue invoice, and GOV.UK confirms the compensation bands:
| Unpaid invoice amount | Fixed compensation |
|---|---|
| Under £1,000 | £40 per invoice |
| £1,000 to £9,999.99 | £70 per invoice |
| £10,000 or more | £100 per invoice |
Worked example: a £2,500 invoice paid 45 days late
Suppose you invoiced a client £2,500 with payment due on 1 August, and they finally paid 45 days later on 15 September. Here is exactly what UK law entitles you to add:
- Statutory interest rate: 8% + 3.75% base rate = 11.75% per year
- Annual interest on £2,500: £2,500 x 0.1175 = £293.75
- Daily interest: £293.75 / 365 = £0.80 per day (rounded)
- Interest for 45 days overdue: £0.80 x 45 = £36.23
- Fixed compensation (invoice between £1,000 and £9,999.99): £70.00
Total recoverable on top of the invoice: £106.23, making the full amount owed £2,606.23. You can calculate the interest on any overdue invoice with LancerBill’s late payment fee calculator, which applies the statutory rate and compensation bands for you.
Tip: These rights apply automatically unless your contract already provides a “substantial remedy” for late payment, which most freelancer contracts do not. You can also still claim interest and compensation on invoices that were paid late but have since been settled, and you have up to six years to claim in England and Wales.
Note that the 1998 Act covers business-to-business debts only. If your client is a private individual, statutory interest does not apply unless your contract includes a late payment clause, so check what your agreement says. For the full UK rules on this, see our guide to how to charge late payment fees on UK invoices.
How do you write a late payment reminder email?
Keep late payment emails short, factual, and escalation-friendly. Each email should state the invoice number, the amount, the original due date, and the number of days overdue, so there is no ambiguity. Here is a template that works for the formal stage:
Subject: Overdue invoice #0042, £2,500, payment 45 days overdue
Hi [Name],
This is a formal reminder that invoice #0042 for £2,500 was due on 1 August and remains unpaid, 45 days overdue.
Under the Late Payment of Commercial Debts (Interest) Act 1998, statutory interest of 11.75% per year plus £70 fixed compensation now applies to this invoice. Please arrange payment of £2,606.23 by [date, 7 days out].
If you are disputing any part of this invoice, please tell me today so we can resolve it.
Regards, [Your name]
Send the formal notice only after softer reminders have failed. Many clients pay at this stage because the concrete numbers make the cost of continued delay visible. Our step-by-step guide to how to write an invoice covers how to set payment terms up front so you rarely need this email at all.
What if the client still does not pay?
If reminders and the formal notice have not worked after 60 days, move up the escalation ladder. Each step below costs a little more time or money than the last, so only climb as high as you need to.
- Letter before action: A written demand giving the client 7 to 14 days to pay before you start legal proceedings. This is a required step before most court claims, so treat it as mandatory preparation rather than a bluff.
- Stop further work: If the client owes you for an ongoing retainer or project, pause delivery until the outstanding balance is cleared. State this in writing. Do not keep working for free.
- Debt collection agency: Agencies typically charge a percentage of the recovered amount, so this makes sense for larger debts. Your contract or the Act may let you recover reasonable recovery costs on top of the debt.
- Small Business Commissioner: If the late payer is a larger UK business, the Small Business Commissioner runs a free complaints service for late payment disputes between small businesses and their larger customers.
- Court claim: For debts up to £10,000, the county court’s small claims track (filed online via Money Claims Online) is designed for individuals and small businesses to use without a solicitor. Court fees are added to what the debtor owes if you win.
Watch out: Always check whether the client has a genuine dispute about the work before escalating. If they claim the invoice is wrong or the work was incomplete, courts expect you to have engaged with the dispute. Deal with the objection first, then chase the balance.
How do you stop clients paying late in the future?
The cheapest late payment is the one that never happens. Four habits prevent most unpaid-invoice problems:
- Put payment terms on every invoice. State the due date (“Payment due within 14 days”), accepted payment methods, and a note that late payment charges apply. LancerBill’s free invoice generator lets you add payment terms to every invoice so the expectation is written down before any dispute exists.
- Ask for a deposit on larger projects. A 25 to 50 percent upfront payment filters out clients who were never going to pay, and gives you cash flow even if the final invoice is slow.
- Invoice immediately, not at month end. The payment clock starts when the invoice lands. Send it the day the work is delivered.
- Keep a payment record. When a payment does arrive, issue a receipt with LancerBill’s receipt generator so your records are complete if a later dispute arises.
Key takeaways
- An invoice is overdue the day after its due date, or 30 days after issue if no date was agreed.
- Start with friendly reminders and a phone call; escalate to formal notices only when those fail.
- UK law automatically gives you statutory interest (currently 11.75% a year) plus £40 to £100 fixed compensation per overdue business invoice.
- A £2,500 invoice paid 45 days late is worth an extra £106.23 in interest and compensation.
- If nothing works, escalate: letter before action, debt collection, the Small Business Commissioner, or a small claims court filing.
- Prevent repeats with written payment terms on every invoice and deposits on larger projects.
Frequently asked questions
How long should I wait before chasing an unpaid invoice?
Send a polite reminder 1 to 3 days after the due date passes, then follow up around day 7 to 10 and call at day 14. There is no rule that says you must wait weeks. Prompt, professional follow-up is the single biggest predictor of getting paid, and clients expect it.
Can I charge late fees if I did not mention them on the invoice?
In the UK, yes, for business clients. The Late Payment of Commercial Debts (Interest) Act 1998 gives you an automatic right to statutory interest and fixed compensation on business-to-business invoices, whether or not you mentioned late fees. If you only invoice private individuals, you need a late payment clause in your contract.
What is the current late payment interest rate in the UK?
The statutory rate is 8 percentage points above the Bank of England base rate. With the base rate at 3.75% as of October 2026, the current statutory rate is 11.75% per year, accruing daily as simple interest from the day after the invoice became overdue.
Should I keep working for a client who has not paid?
No. Pausing delivery until the outstanding balance is cleared is standard practice and entirely reasonable. Tell the client in writing that work is on hold pending payment. Continuing to work for free gives you no leverage and usually makes the debt larger.
Is it worth taking a small unpaid invoice to court?
Often yes. The small claims track handles debts up to £10,000 and is designed to be used without a solicitor, with modest filing fees that are added to the debt if you win. The fixed £40 to £100 compensation per invoice means even small debts carry a meaningful recovery amount.
Rates last reviewed: October 2026.
Most payment chases start with the email trail: our guide on sending an invoice by email includes the reminder sequence to use before an invoice turns into a debt.
This guide is for general information only and is not financial, tax or legal advice.