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Stage 1: payment reminder (7–14 days overdue)
The first letter should be firm but assume the non-payment may be an oversight. Reference the invoice number, the amount outstanding, the original due date, and your payment details. State the number of days overdue and ask for payment or confirmation of a payment date within five working days.
Keep the tone professional. Many overdue invoices at this stage are the result of internal processing delays rather than deliberate non-payment, and an aggressive opener can damage the trading relationship unnecessarily.
Stage 2: formal written demand (21–30 days overdue)
The second letter escalates in tone and introduces the statutory consequences of continued non-payment. State explicitly that you are now charging interest under the Late Payment of Commercial Debts (Interest) Act 1998, and calculate the amount accrued to date. Add the fixed compensation amount to which you are entitled.
Specify a seven-day payment deadline and state that failure to pay will result in further action without additional notice. Send this letter by recorded delivery as well as email, and retain proof of delivery.
Stage 3: pre-legal notice (45+ days overdue)
The third letter is a formal letter before action and should mirror the requirements set out in the Pre-Action Protocol for Debt Claims (which applies to business creditors pursuing individuals or sole traders; for limited company debtors, the spirit of the protocol is good practice even if not strictly required). Summarise the debt, the accrued interest and compensation, and state clearly that you will commence legal proceedings — typically via Money Claim Online — within a defined period, usually 14 days, if payment is not received.
At this stage, consider whether the debtor is genuinely unable to pay versus unwilling to pay; the appropriate next step differs significantly. Confirm your options with your solicitor or a specialist debt recovery service before issuing proceedings.
Frequently asked questions
Do I need a solicitor to issue a debt recovery letter?
No — you can send letters yourself. However, a letter on a solicitor's headed paper often prompts faster payment, and legal advice is worthwhile before issuing court proceedings, particularly if the debtor is likely to dispute the debt.
Can I stop supplying a client who has unpaid invoices?
This depends on your contract terms. If your terms include a right to suspend services for non-payment, you can exercise that right after giving appropriate notice. If not, unilaterally stopping supply could itself constitute breach. Check your contract carefully or take legal advice.
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