An unpaid invoice is one of the most common commercial disputes in England and Wales, and many are resolved without a court ever being involved. The steps below are what a solicitor would expect you to have done — or to have thought about — before instructing them.
First, check what you are actually owed
Your claim is not just the invoice value. Where both you and the debtor were acting in the course of a business, the Late Payment of Commercial Debts (Interest) Act 1998 gives you three things automatically, unless your contract substitutes a different, substantial remedy:
- Statutory interest at 8% per year above the Bank of England base rate, running from the day after the agreed payment date or, if no date was agreed, from 30 days after the later of delivery and the customer having notice of the amount (usually the invoice). Very long agreed payment terms are subject to limits.
- Fixed compensation for each overdue invoice: £40 for debts under £1,000, £70 for debts of £1,000 to £9,999.99, and £100 for £10,000 or more.
- Reasonable recovery costs beyond the fixed sum, where the reasonable costs of recovering the debt are not met by it.
Late payment interest and compensation explains each of these, including how the rate is fixed.
If the debtor is a consumer rather than a business, the 1998 Act does not apply. Interest can still be claimed under any interest term in the contract or, failing that, in court proceedings under s.69 County Courts Act 1984. That is at the court's discretion and at no fixed rate (GOV.UK guidance says the rate is usually 8%), and it can cover the period since the debt fell due.
Second, establish who you are dealing with
Search Companies House for the exact legal entity you contracted with. Many disputes founder because the invoice was addressed to a trading name, a director personally, or a company that has since been dissolved. Check:
- the registered name and company number;
- whether accounts are overdue or the company is in a strike-off, administration or liquidation process;
- whether the person who instructed you had authority to bind that entity.
A judgment against an insolvent company is a piece of paper. If the debtor looks doubtful, that changes the economics of everything that follows.
Third, send a letter before action
The courts expect you to have tried to resolve the dispute before issuing a claim. The Practice Direction on Pre-Action Conduct and Protocols applies where no specific protocol does, which covers most debts owed by a company. It expects a letter that:
- gives concise details of the claim: the basis on which it is made and a summary of the facts;
- says what is wanted and, where that is money, how the amount is calculated (including interest and compensation);
- allows a reasonable time to respond — the Practice Direction gives 14 days for a straightforward case.
The parties are also expected to disclose key documents, such as the invoices and terms, and to consider alternative dispute resolution, such as mediation, before a claim is issued.
If the debtor is an individual or a sole trader, the more demanding Pre-Action Protocol for Debt Claims applies instead. It requires a 30-day response period, an information sheet, a reply form and a financial statement form, and a statement of account or the equivalent details in the letter — and a court can penalise a creditor in costs for skipping it. What the letter before action has to say sets out both sets of rules.
Fourth, decide whether court is proportionate
Claims are allocated to a track by value. Since October 2023:
| Track | Value | What it means in practice |
|---|---|---|
| Small claims | up to £10,000 | It can be run without a lawyer, and started online. Legal costs are generally not recoverable, so a solicitor's fees are a cost the business bears itself. |
| Fast track | £10,000 – £25,000 | Fixed recoverable costs apply. A solicitor is usual. |
| Intermediate track | £25,000 – £100,000 | Fixed recoverable costs in bands. |
| Multi-track | over £100,000 or complex | Costs assessed; full litigation. |
The limits above are those in force at the time of writing (October 2026); the court looks at more than value, as which court track and what costs you recover explains.
For a clean debt with no real defence, a statutory demand (for a debt of more than £750 owed by a company) can be quicker than a claim, because it starts the clock towards a winding-up petition. It is suited only to a debt that is genuinely undisputed — a disputed debt is the wrong subject for a statutory demand and can rebound in costs. See what a statutory demand is and is not and when the customer disputes the invoice.
A judgment is not the end either: enforcing a judgment covers what it takes to turn one into money, and the time limits apply throughout.
What a solicitor will want from you
- The contract, terms and any purchase order or quote.
- Every invoice, with delivery or sign-off evidence.
- A chronology of chasers and the debtor's replies.
- Your Companies House findings on the debtor.
- A clear statement of what outcome you want: payment in full, a payment plan, or a commercial settlement.
The more of that you already have organised, the less of a solicitor's time — and your money — the first meeting consumes.
This guide is general information about the law of England and Wales. It is not legal advice and does not take account of your circumstances. Time limits apply: a claim for a simple contract debt must generally be brought within six years of when the right to be paid arose, which can be earlier than the invoice due date.
Frequently asked
Can I charge interest on a late invoice?
If both parties were acting in the course of business, the Late Payment of Commercial Debts (Interest) Act 1998 lets you claim statutory interest at 8% above the Bank of England base rate, plus a fixed sum of £40, £70 or £100 per invoice depending on its size, plus reasonable recovery costs.
Do I have to send a letter before I sue?
The court expects one, and can penalise a party that issues a claim without it. The Practice Direction on Pre-Action Conduct expects a letter before claim setting out the basis of the claim, the facts, what is wanted and how the sum is calculated, with a reasonable time to respond. Where the debtor is an individual or sole trader, the Pre-Action Protocol for Debt Claims applies instead and requires a 30-day response period and specific enclosures.