With 25 years’ experience chasing debts, and tens of millions recovered for happy clients, FWJ is a firm with a genuine track record in recovering business debt
Late payments are one of the biggest threats to cash flow for UK SMEs — and unfortunately, they’re all too common. Whether you’re chasing a longstanding client or handling a new customer that’s gone silent, the following expert-backed tips can help you recover overdue invoices effectively and reduce future risks.
1. Set out clear payment terms upfront
Prevention is your first line of defence. Clear and legally sound payment terms can help prevent disputes and late payments from arising in the first place. A small investment in drafting robust terms and conditions (or reviewing them from time to time) can save businesses a small fortune later on.
Another tip – many businesses assume that including terms on an invoice is enough — but by then, it is too late. Make sure your terms are sent at the outset of any customer trading relationship – not just “after the event”, for example on invoices.
What to include in your terms:-
We find that certain boiler plate clauses can help enormously
- Invoice due date (e.g. “payment due within 30 days”)
- Consequences of late payment (statutory interest and compensation under the Late Payment Act 1998)
- Accepted payment methods
- Right to recover legal or collection costs
- No set off clause
- Jurisdiction clause (e.g. “subject to English law”)
You should take legal advice when getting terms drafted. In addition to boiler plate clauses, there are bound to be other terms referable to your own business sector which will make your position even stringer.
And as we said above – make sure these terms are shared at the outset — in your contract, proposal, or engagement letter. Having this in writing gives you solid legal standing should you need to escalate.
At FWJ we can review your terms and suggest improvements to them to help ensure swift recovery of your debts in the future.
2. Follow up as soon as payment is overdue
Timely follow-up is critical. The longer a debt remains unpaid, the harder it becomes to collect. A friendly nudge the day after payment is due can prevent the need for formal action later on.
Recommended follow-up sequence:-
Whilst there is no absolute “right” process, our experience has shown the following is a good process to adopt.
- Day 1–3 overdue: Friendly email reminder (include invoice, due date, and payment details)
- Day 7–10 overdue: Follow-up email or phone call — firm but professional tone
- Day 14–21 overdue: Final notice — clearly state your intent to escalate if unpaid
Document all communications — they’ll serve as evidence if you need to send a Letter Before Action or issue a County Court claim.
We can help look at your internal processes to ensure you have everything set up to ensure swift and consistent credit control
3. Use accounting software to automate your credit control
Manually managing invoices is inefficient and prone to delays — especially when juggling multiple clients. Using cloud-based software simplifies the process and improves cash flow visibility.
Benefits of accounting platforms
Systems such as Xero, QuickBooks, and Sage can allow you to:-
- Automate invoice reminders at regular intervals
- See overdue accounts at a glance
- Link directly with your bank for payment reconciliation
- Export reports for regular credit control reviews
Automation ensures consistency — and it frees your team to focus on higher-value tasks.
4. Consider offering small incentives for early or upfront payment
While charging penalties can deter late payers, rewarding early payment can be just as — if not more — effective. It also helps to build goodwill, especially with long-term clients.
Ideas for incentives:-
- Offer a 2–5% discount if paid within 7 days (but be careful this doesn’t affect your profit margins too much – build this in to your pricing models)
- Provide bonus services or priority booking for prompt payers
- Create a loyalty pricing structure for clients with strong payment history
This strategy improves cash flow and gives clients a positive reason to pay sooner.
5. Make it easy for clients to pay you
A surprising number of invoices remain unpaid due to simple friction points: unclear instructions, missing payment details, or inconvenient methods. Removing those barriers increases the likelihood of timely payment.
Best practices:–
- Include full bank details (including IBAN/SWIFT if needed)
- Accept multiple payment types (BACS, card, online transfer)
- Use branded, easy-to-read invoice templates
- Provide a point of contact for payment queries
- Speak to your customers and find out what they prefer to do and how to eliminate any friction in the system. Often delays are unintentional and just down to simple misunderstandings.
- Adopt payment policies in a new customer starter pack – again to avoid any misunderstanding.
The smoother the process, the faster you’ll get paid.
At FWJ we can review your systems and let you know any improvements we would suggest from our 25 years’ helping clients.
6. Apply late payment interest and compensation charges
The Late Payment of Commercial Debts (Interest) Act 1998 allows businesses to charge:
- 8% interest above the Bank of England base rate for every day an invoice is overdue
- A fixed compensation fee PER INVOICE:
- £40 for debts under £1,000
- £70 for debts between £1,000–£10,000
- £100 for debts over £10,000
Whilst technically, you don’t need to state these rights in your contract (they apply automatically in most B2B transactions), it makes sense to do so. Laying out clearly the position up front can also focus the customer’s mind about paying on time.
And referencing these in reminders and final notices should also help obtain payment – after all, no one wants to pay interest and compensation if they can avoid it.
Calculating interest and compensation can be slow if you are doing it manually. By enlisting our help at FWJ, our systems can calculate all interest and compensation due to you in seconds – helping you maximise you claim. The difference can run into hundreds, if not thousands, of pounds.
7. Send a formal overdue invoice letter or Letter Before Action
If multiple reminders haven’t worked, it’s time to escalate. A formal overdue invoice letter sets a clear deadline and outlines the legal consequences of non-payment. Even more effective is a solicitor’s Letter Before Action (LBA), which typically results in payment within days.
A strong LBA should:
- Clearly state the amount owed and the original invoice(s)
- Reference your legal right to claim interest and costs
- Set a firm deadline (e.g. 7–14 days)
- Mention the next step — e.g. County Court claim, statutory demand
At Francis Wilks & Jones, we’ve helped thousands of businesses recover debts quickly through professionally drafted Letters Before Action. Let us help you too. Read more about our Letter Before Action service, or just give us a call today.
8. Use a statutory demand where appropriate
A statutory demand is a powerful tool for recovery of debts. Whilst there is no minimum threshold, any debt over £750 is one in our experience which could be suitable for a statutory demand.
When to use a statutory demand
You do need to be careful when using statutory demands and our experts can help you avoid making costly mistakes. As a general rule, they can be used when
- The debt is clear, due, and uncontested
- The customer does not have a valid cross claim which exceeds the value of your claim
- You have all the back up documentation evidencing the underlying contract and monies due (eg written terms, purchase orders, delivery notes etc).
Be aware: statutory demands are not suitable for disputed debts. Misusing them could result in significant costs penalties. We always recommend speaking to our team if you are considering using a statutory demand.
You can read more about statutory demand in our fantastic free Statutory Demand Guide. Or just pick up the phone to one of the team for a no obligation chat.
9. Know when to escalate to legal action
Sometimes, legal action is the only way forward. If your attempts to chase a debt have been ignored or dismissed, issuing a County Court claim (often via Money Claim Online) can force the debtor to respond — or risk a judgment being entered against them.
Typical steps:
- File the claim and pay a court fee (added to the debt)
- The debtor has 14 days to respond
- If no defence is filed, you can request a County Court Judgment (CCJ)
- If they still don’t pay, proceed with enforcement (see next tip)
We can help you assess the strength of your claim and manage the process for maximum recovery.
Our fantastic systems are set up to allow for same day issuing – ensuring that your claim is up and running without delay.
10. Strengthen your systems to avoid future late payments
Debt recovery doesn’t stop once you’ve been paid — it should lead to better internal practices that reduce the chances of it happening again.
What to review:
- Are your contracts watertight and signed before work starts?
- Do you credit check clients before extending terms?
- Are your payment terms consistent and enforced?
- Can you reduce reliance on long payment cycles with upfront deposits?
Strong credit control systems reduce risk and give your business greater financial resilience.
We work closely with clients to give then the benefit of 25+ years’ experience on how best to set up and run your credit control systems.
Contact us today for help
Whatever the nature of your enquiry – our brilliant debt recovery team are here to help. Call us today for your free consultation.
Or click here to read more about our Debt Recovery Services and the ways in which we can help
Extremely thorough, professional and speedy, and the fees were much more reasonable than the competition. Highly recommended.
A private client we assisted with issuing a winding-up petition to recover debts
