Before considering a formal debt-recovery procedure for an unpaid invoice, it’s important to follow the standard business practices and time frame for chasing a delayed invoice.
During this process, make sure to record all conversations. If you speak over the phone, email the person you talked to a summary of the discussion.
Having written records will prevent any misunderstandings and provide legal proof if you need to take the matter to court. It’s also important to directly ask when you can expect to receive the payment.
Standard business practice for recovering an unpaid invoice
To help we’ve created this handy flowchart below which you can follow to chase any unpaid invoices.
Next steps
If you still haven’t been paid after following normal practices, you have three main options for debt recovery: mediation, statutory demand, or court action. Most companies typically begin the debt recovery process with mediation, which involves a face-to-face conversation, facilitated by a mediator, to address any misunderstandings.
A statutory demand is also another option as it gives companies 21 days to respond. If they don’t respond or continue to not pay their invoice, you can then apply to take them to court and either make them bankrupt (for debts greater than £5000) or wound up (for debts greater than £750).
If both previous debt recovery methods have failed, court action may be required. To file a claim, you must be able to prove that the client has never disputed the invoice and sufficient attempts to clarify the issue have been made.
For more information on debt recovery options as well as if you should employ a debt collection service, read How to Recover an Unpaid Invoice.
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