The short answer:work up a ladder and stop as soon as they pay. First a clear, friendly reminder in case it was simply missed. Then a firm final notice with a hard deadline. Then a formal letter before action. On a business-to-business debt you can add statutory interest of 8% plus the Bank of England base rate and a fixed compensation sum. If all that is ignored, a county court claim through Money Claim Online, with debts up to £10,000 usually handled as a small claim. Start relationship-first, escalate only when a step is genuinely exhausted, and keep a written record throughout.
Step 1: Send a clear, friendly reminder
Most unpaid invoices are an oversight, not a refusal, so assume the best first. A short, warm reminder that restates the invoice number, the amount, the due date and how to pay clears the majority of late payments without any friction and keeps the relationship intact. Make paying easy: include your bank details and a payment link. For wording you can copy and send, see the payment reminder email templates and how to chase a late payment politely.
Step 2: Send a firm final notice
If a couple of reminders go unanswered, change the tone from nudge to notice. Keep it factual and calm, but make it clear this is your final request before formal steps, and give a hard deadline to pay or respond. Reference the earlier reminders so the record shows you gave fair chances. This is often the message that gets a stalled payment moving, because it signals you are ready to escalate.
Step 3: Send a letter before action
When the final notice is ignored, a letter before action is the formal step before court. It is a written demand for payment within a set period, commonly 7 to 14 days, that sets out what is owed and why. It is part of the pre-action protocol the courts expect you to follow before litigating, and skipping it can count against you later. A clear letter before action often prompts payment on its own. For what to put in it and how long to give, see the letter before action guide.
Step 4: Add statutory interest and compensation
On a business-to-business debt, the Late Payment of Commercial Debts (Interest) Act 1998 entitles you to charge statutory interest at 8% plus the Bank of England base rate per year on the overdue amount, running from the day after payment was due. On top of that you can claim a fixed compensation sum for the cost of recovering the debt:
- £40 for a debt under £1,000
- £70 for a debt of £1,000 to £9,999.99
- £100 for a debt of £10,000 or more
Because the base rate changes, this page does not quote a single current figure, work out exactly what you are owed with the late-payment interest calculator, which uses the live rate. Stating the interest and compensation in your letter before action also strengthens it.
Step 5: Start a county court or small claims claim
If the deadline in your letter before action passes and you are still unpaid, the last resort is a court claim. For most straightforward debts you can file online through Money Claim Online, part of the county court, and claim the interest and compensation alongside the debt. Debts up to £10,000 are usually dealt with through the small claims track, which is designed to be used without a solicitor. Only go this far when you are prepared to follow through, and consider legal advice for a large or complex claim.
Where Kelo fits
The hardest part of this ladder is doing it consistently while you are busy delivering work. Kelo shows you what you are owed and who to chase first, then drafts each chase, and a letter before action, in your own voice for you to approve. It connects read-only to Xero or QuickBooks, so nothing changes in your accounts, and nothing auto-sends, you review and send every message yourself. For the bigger picture, see the full guide to getting paid.