Unpaid invoices: first steps for businesses in St Albans and Hertfordshire

If a customer has not paid, the most useful thing you can do first is check that the money is properly due and that you can prove it. Then send a clear, measured letter before action that follows the pre-action rules, and only after that think about court.

That sounds obvious, but many recovery problems start with a rushed demand, a missing document or a threat that cannot be carried out. The checklist below sets out the first steps I would expect a business in St Albans, Hertfordshire or anywhere in England and Wales to take. The legal rules are the same across England and Wales; there is nothing specific to Hertfordshire about them.

Step 1: check the debt is properly due

Before chasing, confirm:

• Who the customer is. Is it a limited company, a partnership, a sole trader or an individual? The correct legal name matters for any letter and any claim. For a company, check the name and registered office on the Companies House register.
• What was agreed. Find the contract, quotation, purchase order, accepted estimate or terms and conditions. If the agreement was by email or partly oral, collect the emails and note what was said and when.
• That the work or goods were delivered. Delivery notes, timesheets, sign-offs, photographs or completion emails all help.
• When payment was due. Check the payment terms in your contract. If none were agreed, there may be statutory default periods for business-to-business debts.
• Whether anything has been raised already. Has the customer complained about quality, delay or the amount? A complaint does not cancel the debt, but it changes how you should approach it.

Step 2: gather your evidence in one place

Put together a simple file containing:

1. The contract or terms, and evidence that the customer accepted them.
2. The invoice or invoices, with dates and amounts.
3. Proof of delivery or completion.
4. A statement of account showing what has been paid and what remains outstanding.
5. All chasing correspondence, including any replies.
6. Any complaints and your responses.

Keep everything, including documents that seem unhelpful. If the matter goes to court, both sides are expected to preserve relevant documents.

Step 3: work out what you can claim

You can claim the unpaid principal. You may also be able to claim:

• Contractual interest, if your terms provide for it.
• Statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998, if the debt is between businesses and your contract does not set its own interest rate. GOV.UK describes the statutory rate as 8% plus the Bank of England base rate.
• Fixed compensation under the same Act for each late invoice: £40 for a debt under £1,000, £70 for a debt of £1,000 or more but under £10,000, and £100 for a debt of £10,000 or more, with the possibility of claiming reasonable recovery costs above that sum (section 5A, retrieved 26 October 2026).

The 1998 Act does not apply to debts owed by consumers. Whether, and from when, interest runs depends on the contract and the facts, so check before you include a figure in a letter.

Step 4: send a proper letter before action

The courts expect parties to try to resolve matters before issuing a claim. Under the Practice Direction – Pre-Action Conduct, a letter of claim should set out the basis of the claim, a summary of the facts, what you want and how any figure is calculated. In a straightforward business-to-business matter, a reasonable time to respond is often around 14 days.

If the customer is an individual, including a sole trader, the Pre-Action Protocol for Debt Claims applies. It requires the letter to include specific information, to enclose an information sheet, reply form and financial statement form, and to allow 30 days for a response before proceedings are issued. More time may be needed if the debtor says they are seeking debt advice.

A good letter before action:

• states the amount due and how it is made up;
• identifies the contract and invoices;
• deals briefly with any complaint that has been raised;
• explains how to pay;
• gives a clear deadline; and
• says what you intend to do if the debt is not paid.

Only say you will take a step if you are genuinely prepared to take it.

Step 5: consider settlement and payment plans

If the customer replies offering instalments or a reduced sum, consider it seriously. A reliable payment plan can be worth more than a judgment against a business that cannot pay. Record any agreement in writing, including what happens if a payment is missed.

The courts also expect parties to consider negotiation or other forms of alternative dispute resolution, such as mediation, before going to court. Ignoring a reasonable invitation to mediate can affect costs later.

Step 6: understand what court involves

If the debt remains unpaid, a claim can be issued in the County Court. Do not assume that every claim under a particular figure is a "small claim". In summary, under the Civil Procedure Rules:

• the small claims track is normally for claims worth up to £10,000;
• the fast track is normally for claims worth up to £25,000;
• the intermediate track is for claims worth up to £100,000 that meet its conditions; and
• the multi-track is for larger or more complex claims.

The track affects the procedure and how much of your legal costs you can usually recover. Court issue fees are banded by the value of the claim and are published by HM Courts & Tribunals Service in its EX50 fees guide.

If the customer does not respond to a claim, you may be able to obtain judgment without a hearing. If they defend it, the process takes longer.

Step 7: think about recovery from the start

A judgment is only valuable if it can be enforced. Before issuing, ask:

• Is the customer still trading?
• Do they have assets, income or property?
• Are there signs of financial difficulty?

Enforcement options include a warrant or writ of control, a charging order over property, an attachment of earnings order and a third-party debt order. Each carries its own fee and none is guaranteed to succeed.

A warning about statutory demands

A statutory demand is the first step towards bankruptcy or winding up. It is not a general debt-collection letter. If the customer genuinely disputes the debt, the court can set the demand aside where the dispute appears to be on substantial grounds, and the creditor may have to pay the costs. Insolvency routes should only be used where they are legally suitable, which needs advice on the specific facts.

Do not leave it too long

For most claims under a simple contract in England and Wales, the limitation period is six years from when the cause of action arose. In practice, the longer a debt is left, the harder it usually is to recover: memories fade, documents go missing and businesses close.

Quick checklist

• Correct legal name and address of the customer confirmed.
• Contract or terms located.
• Proof of delivery or completion gathered.
• Statement of account prepared.
• Interest and compensation calculated, if applicable.
• Letter before action sent, following the correct pre-action rules.
• Settlement or payment plan considered.
• Recoverability assessed before issuing a claim.

Scope of this article

This is general information about the law in England and Wales as at 26 October 2026. It is not legal advice on your situation, and it does not cover regulated consumer credit debts. Court rules and fees change, so check the current position before acting.

Next step

If you would like help with an unpaid invoice, see my debt recovery service or send a short summary by email to info@sadikbugra.com. I will carry out a conflict check before discussing your matter. Sending an enquiry does not mean I am acting for you or monitoring any deadline.