I sat at the kitchen table last month staring at a spreadsheet that refused to lie: a client owed us money, and it was three weeks overdue. My husband glanced over and said, “Have you asked them yet?” I had. They just hadn’t answered.
If you run a business in the UK — even a small one — this scenario probably feels familiar. You’re not alone. A staggering 77% of UK SMEs are currently owed money by late-paying customers, with the average unpaid amount sitting between £18,000 and £22,000.
That is a lot of money to be chasing around while your own bills keep ticking forward.
The real cost of late payments
Late payments do more than delay your cash flow. They can actually threaten whether your business survives.
The numbers are sobering. Late payments cost the UK economy an estimated £11 billion each year and are linked to around 14,000 business closures — roughly 38 businesses shutting down every single day. And 44% of companies say delays are getting more frequent, with payment lags now averaging 32 days.
Hamzah Ajaib, a corporate law solicitor at Hegarty (a firm based in the East of England), put it plainly: late payments have become one of the biggest risks facing SMEs today. The problem isn’t just recovering the money — it’s the disruption to day-to-day operations that can be devastating.
So what do you actually do when someone owes you?
Start with a human approach
Before anything legal, I always start by treating this like a conversation rather than a confrontation. People forget. It happens to all of us.
Send a reminder. A polite email or message often does the trick. Sometimes people genuinely miss an invoice buried in their inbox.
Follow up in writing and keep records. If payment still doesn’t come, put everything in writing — emails, letters, even text messages. You’ll need that paper trail later if things escalate.
Offer a payment plan. If the client is genuinely struggling, agreeing to staggered payments can get you money faster and avoid legal costs altogether. I’d rather receive £500 a week than wait three months for a lump sum that might never arrive.
Call in a solicitor. If nothing is moving, speak to a solicitor. A formal demand letter often jolts debtors into action. Isabella Green, a dispute resolution solicitor at Hegarty, told me: “Sometimes a solicitor’s letter is enough to show you mean business. It’s a formal step that tells the debtor this isn’t going away, and that often results in swift resolution.”
When your reminders are being ignored
If you’ve chased and chased with no response, it’s time for formal steps. Here is what they mean:
County Court Judgment (CCJ). This is a court order requiring the debtor to pay. If they still don’t, you can instruct enforcement agents — what most people call bailiffs — to collect. Think of it as getting the courts on your side.
Statutory Demand. For business-to-business debts, this is a formal 21-day warning letter. If payment isn’t made within those 21 days, you can start winding-up proceedings — a serious legal process that can force the business into liquidation (essentially shutting it down and selling its assets to pay creditors). This is heavy artillery.
Both options are powerful, but use them carefully. If you want to preserve a long-term relationship with this client, or if costs are a concern, weigh things before pulling the trigger.
Is Small Claims Court worth it?
If you’re chasing less than £10,000, the Small Claims Court is usually your best route. It’s designed to be straightforward and affordable for smaller disputes.
But there are two things to know:
Legal costs are usually not recoverable. This means even if you win, you won’t get your legal fees back from the other side. Factor that into your decision.
Solid documentation is everything. Contracts, invoices, written communication — these are what prove your case. Isabella Green warns: “Too many businesses rely on goodwill instead of robust contracts.” Having clear terms from the start isn’t just good practice. It’s your safety net.
You might be owed more than the invoice says
Here is something a lot of people don’t realize: you can claim interest on late payments, and it adds up faster than you’d expect.
The Late Payment of Commercial Debts Act allows for 8% interest above the Bank of England base rate in business-to-business cases. On top of that, your own contract might include a higher contractual interest rate if you agreed to one upfront.
Check your contracts. You might be entitled to significantly more than just the original invoice total.
How to protect yourself next time
Prevention is almost always cheaper than recovery. I learned this the hard way after a client ghosted us for months over a £4,000 invoice — an amount that should never have been that hard to collect.
Draft clear terms and conditions. Set out payment timelines, consequences for missed deadlines, and any late-payment charges. This reduces the room for disagreement before it happens.
Have watertight contracts. A good contract defines responsibilities, deadlines, and — critically — your right to terminate if things go wrong. That last point matters most when a client becomes a repeat offender.
If you’re dealing with a non-paying customer right now, take action early. Isabella Green’s advice is simple: “The earlier you act, the better your chances of recovering what you’re owed, and protecting your business from lasting damage.”
Today’s small step: review one overdue invoice and send that reminder email before the end of day. It takes five minutes, and it might save you months of stress.