How to chase an unpaid invoice: timeline, email templates and next steps

Why chase early

Late payment is common, and it compounds. In the UK, the Office of the Small Business Commissioner estimated in 2026 that late payments cost the economy almost £11 billion a year. In the US, QuickBooks’ 2026 Small Business Late Payments Report (industry survey data, not an official statistic) found that 59% of small businesses had overdue invoices, owed an average of $17,700.

Many late payments aren’t bad faith. The invoice went to the wrong inbox, a purchase order number was missing, or it’s waiting for someone’s sign-off. A reminder the day after the due date fixes those in minutes. Wait three weeks and your invoice sinks under everything else your client has to pay.

The wording matters too. In a field experiment with HM Revenue & Customs covering about 100,000 taxpayers who owed overdue tax (Hallsworth, List, Metcalfe and Vlaev, Journal of Public Economics, 2017), adding one line saying most people pay on time raised payment rates by about 5 percentage points. A follow-up experiment found gains of 3 to 4 points from spelling out the interest cost of paying late and the ways to pay. That was tax, not trade credit, but the lesson carries over: say exactly what’s owed, how to pay and what delay costs.

Your rights in the UK

The Late Payment of Commercial Debts (Interest) Act 1998 applies to business-to-business sales:

• If you didn’t agree a payment date, payment is late 30 days after the client receives the invoice (or the goods or services, if later).
• Agreed terms between businesses are usually capped at 60 days, unless both sides agree longer terms that are fair.
• Statutory interest: 8% plus the Bank of England base rate, unless your contract sets a different rate.
• Fixed compensation per invoice: £40 for debts under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more, plus reasonable extra recovery costs.

Worked example: a £2,400 invoice paid 45 days late, with the base rate at 3.75% (September 2026). Interest: £2,400 × 11.75% × 45 ÷ 365 = £34.77. Add £70 compensation: £104.77 in total.

Reform is on the way. The Commercial Payments Bill, introduced in the House of Lords on 19 May 2026, would make 60 days a hard cap on most business payment terms, make statutory interest impossible to contract out of, and give the Small Business Commissioner powers to adjudicate disputes and fine persistent late payers. It isn’t law yet and commentators don’t expect it in force before 2027, so check its progress before relying on it.

If your client is a consumer, the 1998 Act doesn’t apply. You can only charge interest or late fees if your terms said so, or ask a court to award interest if you sue.

Your rights in the US

There’s no federal law setting payment terms or late interest for private business invoices. What you can charge depends on:

• Your contract or invoice terms. A late fee or interest rate only applies if the client agreed to it, and state usury and consumer rules can cap it. Put it in writing before the work starts.
• State freelancer laws. New York City’s Freelance Isn’t Free Act (2017) and New York State’s version (in force since 28 August 2024) require a written contract for freelance work worth $800 or more, and payment by the agreed date or within 30 days of completing the work if no date was set. Remedies can include double damages. California’s Freelance Worker Protection Act (from 1 January 2025, jobs of $250 or more) and Illinois’s Freelance Worker Protection Act (from 1 July 2024, $500 or more over 120 days) set similar 30-day defaults.
• Small claims court. Limits vary widely by state. In California, individuals and sole proprietors can claim up to $12,500, while most businesses are limited to $6,250. In New York City, a business can file a commercial claim of up to $10,000 without a lawyer, after sending a demand letter at least ten days before filing.

The 4-step chasing timeline

Pick a schedule and use it for every client. Consistency beats intensity: clients who know you always follow up the day after the due date start paying on time.

Before step 1, check the basics. Did the invoice reach the right person? Does it have the purchase order number the client’s accounts team needs? An invoice rejected for a missing reference won’t get paid however firm your emails are.

Log everything: date sent, to whom, any reply. You’ll need that trail if the debt goes to a mediator or a court.

Template 1: friendly reminder (day 1)

Subject: Invoice INV-[2026-042] – due [30 Sep 2026]

Hi [First name],

Just a quick note: I haven’t yet received payment for invoice INV-[2026-042]
for [£2,400.00], which was due on [30 Sep 2026]. I’ve attached it again
in case it went astray.

You can pay by bank transfer to:
[Account name] · Sort code [00-00-00] · Account [00000000]
Reference: INV-[2026-042]

If it’s already on its way, please ignore this. And if anything’s missing
on your side, such as a PO number, let me know and I’ll send it straight over.

Thanks,
[Your name] · [Business] · [Phone]

Template 2: firm reminder (day 10)

Subject: Second reminder – invoice INV-[2026-042], 10 days overdue

Hi [First name],

Invoice INV-[2026-042] for [£2,400.00], due on [30 Sep 2026], is still
unpaid, following my email of [1 Oct 2026].

Could you let me know the date you’ll make the payment? If something is
holding it up (approval, a query on one of the items), I’m happy to talk
it through this week.

As set out in my terms, late payments accrue interest at [8% above the
Bank of England base rate], plus fixed compensation for recovery costs.

Invoice attached · Bank details: [….] · Reference: INV-[2026-042]

Best regards,
[Your name] · [Business] · [Phone]

Template 3: final reminder (day 20)

Subject: Final reminder before formal action – invoice INV-[2026-042]

Dear [First name],

Despite my reminders of [1 Oct] and [10 Oct 2026], invoice INV-[2026-042]
for [£2,400.00], due on [30 Sep 2026], remains unpaid.

Please make payment in full by [27 Oct 2026].

If payment isn’t received by then, I will send a formal letter before
action and may start a court claim without further notice. Statutory
interest and fixed compensation will be added to the amount claimed.

I’d rather resolve this with you. If paying in instalments would help,
send me a written proposal before that date.

Regards,
[Your name] · [Business] · [Phone]

Template 4: formal notice / letter before action (day 30)

Send it by email and by recorded or tracked post so you can prove it arrived. In England and Wales, if your client is an individual or a sole trader, the Pre-Action Protocol for Debt Claims applies: the letter must include an information sheet and reply form, and you generally give them 30 days to respond before going to court. For a company, set a clear and reasonable deadline, such as 14 days.

[Your business name]
[Address] · [Email] · [Company no., if any]

[Client name / company]
[Address]

[Date]

LETTER BEFORE ACTION – Invoice INV-[2026-042]

Dear [Name],

You owe [£2,504.77], made up as follows:
  - Invoice INV-[2026-042] dated [31 Aug 2026], due [30 Sep 2026]:   [£2,400.00]
  - Statutory interest at [11.75%] a year to [date]:                [£34.77]
  - Fixed compensation (Late Payment of Commercial Debts Act 1998):  [£70.00]

Despite reminders on [1 Oct], [10 Oct] and [20 Oct 2026], this sum
remains unpaid.

Unless payment is received within [14] days of the date of this letter,
I intend to start court proceedings to recover the debt, interest and
costs without further notice.

Payment details: [….] · Reference: INV-[2026-042]

Yours sincerely,
[Signature]
[Name]
Enclosures: invoice INV-[2026-042], copies of reminders

Update the interest figure to the date you send it, since it grows every day. For a consumer client, remove the statutory interest and compensation lines (the 1998 Act only covers business debts) and add the Pre-Action Protocol documents. In the US, replace the interest lines with whatever your contract allows, and cite your state freelancer law if it applies.

If the letter doesn’t work

UK. In England and Wales, you can claim online through Money Claim Online / the online civil money claims service. Court fees depend on the amount: £70 for a claim of £500.01 to £1,000, £115 for £1,500.01 to £3,000, and £205 for £3,000.01 to £5,000, for example. Claims up to £10,000 generally go to the small claims track, designed for people without a solicitor. Scotland and Northern Ireland have their own procedures.

US. File in your state’s small claims court if the amount fits the limit, or use a collection agency or attorney for larger sums. For freelancers in New York City, the Department of Consumer and Worker Protection runs a complaint process under the Freelance Isn’t Free Act; statewide in New York, complaints go to the Attorney General.

Whatever the country, a court claim costs time. Weigh the amount owed against the fees and your hours, and consider a payment plan or mediation if you want to keep the client.

Fewer reminders to write

The hardest part of chasing is remembering to do it. In Binome360, quotes and invoices are numbered automatically and shared as a link your client can open and download as a PDF. Overdue invoices are flagged, and the app drafts a polite reminder message for you to review and send.

Binome360 doesn’t take payments or chase clients on its own, and it isn’t a certified e-invoicing platform: it prepares documents and messages, and you stay in control of what goes out.

Frequently asked questions

When should I chase an unpaid invoice?

The day after the due date. For large amounts or new clients, a polite heads-up a few days before the due date also helps. The longer you wait, the further your invoice drops down the client’s list.

How do I ask for payment politely?

Assume good faith in the first message, keep it short, and make paying easy: the invoice number, amount, due date, bank details and the invoice attached. Save firmness for the second and third messages, and always offer to discuss any problem.

Can I charge a late fee on an invoice?

In the UK, between businesses, you can claim statutory interest and fixed compensation even if your contract doesn’t mention them. In the US, and for consumer clients anywhere, a late fee generally only applies if it was agreed in advance, within the limits of state law. Put your late-payment terms on every quote and invoice.

What if the client disputes the invoice?

Reply in writing, point by point, and look for a fix: a partial credit, a corrected invoice or a payment plan. Pay special attention to disputes raised late; keeping a clear record of what was agreed and delivered is your best protection.

Should I use a debt collection agency?

It can make sense for larger debts or when you don’t want to spend more hours on it. Agencies usually take a percentage of what they recover. Compare that cost with a small claims filing, which you can often do yourself.

In short

Chase early, on a fixed schedule, with messages that say exactly what to pay, how and by when. In the UK, business debts carry statutory interest and fixed compensation; in the US, your contract and state law set the rules. First step: list every invoice that’s past due today and send the friendly reminder (template 1) to each client.

Sources

• GOV.UK, “Late commercial payments: charging interest and debt recovery”: gov.uk/late-commercial-payments-interest-debt-recovery.
• Bank of England, Monetary Policy Summary, September 2026 (Bank Rate held at 3.75%): bankofengland.co.uk.
• UK Parliament, Commercial Payments Bill [HL], introduced 19 May 2026: bills.parliament.uk/bills/4128; Napthens, “Commercial Payments Bill: a guide”, July 2026.
• Office of the Small Business Commissioner, “Late Payments Research”: smallbusinesscommissioner.gov.uk; GOV.UK, “Largest crackdown on late payments in over 25 years as landmark Bill enters Parliament”, May 2026.
• GOV.UK, “Make a court claim for money: court fees”: gov.uk/make-court-claim-for-money/court-fees; Civil Procedure Rules, Part 27 (small claims track).
• Ministry of Justice, Pre-Action Protocol for Debt Claims (in force since 1 October 2017): justice.gov.uk.
• New York State Department of Labor, “Freelance Isn’t Free Act”: dol.ny.gov/freelance-isnt-free-act; NYC Department of Consumer and Worker Protection, “Protecting Freelance Workers”.
• California SB 988, Freelance Worker Protection Act: leginfo.legislature.ca.gov; Illinois Department of Labor, “Freelance Worker Protection Act”: labor.illinois.gov.
• California Courts, “Small claims in California”: selfhelp.courts.ca.gov; NY Courts, “NYC Small Claims: Commercial Claims”: nycourts.gov.
• QuickBooks (Intuit), “2026 Small Business Late Payments Report” (industry survey, US): quickbooks.intuit.com.
• Hallsworth M., List J. A., Metcalfe R. D., Vlaev I., “The behavioralist as tax collector: Using natural field experiments to enhance tax compliance”, Journal of Public Economics, vol. 148, 2017, pp. 14–31.

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