An unpaid invoice is the most common commercial dispute in England and Wales, and most 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 invoice fell due (or 30 days after delivery or invoice if no due date was agreed).
- 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, if your actual costs of chasing the debt exceed it.
If the debtor is a consumer rather than a business, the 1998 Act does not apply. You can still claim interest, but at the court's discretion (usually 8% simple under s.69 County Courts Act 1984) and only once you issue a claim.
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 to all business-to-business debts. Your letter should:
- Identify the parties and the contract.
- State the amount owed, showing how interest and compensation have been calculated.
- Enclose or list the invoices and any relevant terms.
- Set a clear, reasonable deadline to respond — 14 days is typical for a straightforward business debt.
- Say that you will issue proceedings if the debt is not paid or a proposal received.
- Offer alternative dispute resolution, such as mediation, and say so expressly.
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 and reply form, and a statement of account — and a court can penalise you in costs if you skip it.
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 | You can run it yourself online (Money Claim Online). Legal costs are generally not recoverable, so instructing a solicitor is a cost you bear. |
| 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. |
For a clean debt with no real defence, a statutory demand (for debts of £750 or more against a company) can be quicker than a claim, because it starts the clock towards a winding-up petition. Use it only where the debt is genuinely undisputed — a disputed debt is the wrong subject for a statutory demand and can rebound in costs.
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 the date payment fell due.
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?
Yes. The Practice Direction on Pre-Action Conduct expects a letter before claim setting out the debt, how it is calculated and a reasonable deadline to respond. Where the debtor is an individual or sole trader, the Pre-Action Protocol for Debt Claims applies and requires a longer 30-day response period and specific enclosures.
Next step
Does this sound like your situation?
The five-minute check works out your estimated deadline and the likely court track, and gives you a report you can take to a solicitor.