How to Protect Your Business from Unpaid Invoices – Invoice Recovery Guide

Unpaid invoices can pose a significant threat to the financial health of your business. They can disrupt cash flow, strain resources, and even lead to insolvency in severe cases.

Understanding how to protect your business from unpaid invoices is crucial. It’s not just about chasing late payments. It’s about implementing strategies to prevent them from occurring in the first place. In this comprehensive guide, our expert debt recovery lawyers explore the impact of unpaid invoices on businesses, and your options to recover unpaid invoices.

Schedule a Free Consultation with our expert debt recovery and insolvency lawyers today at 0207 459 4037.

Unpaid Invoices and Their Impact on Your Business

Unpaid invoices are a common issue that businesses of all sizes face. They occur when a client or customer fails to pay for goods or services by the due date specified on the invoice.

The impact of unpaid invoices on a business can be severe. They can disrupt cash flow, making it difficult for businesses to meet their financial obligations. This can lead to a ripple effect, causing delays in paying suppliers, employees, and other operational costs.

Consequences of Unpaid Invoices

An unpaid invoice is essentially a debt owed to your business. It’s a result of providing a product or service without receiving payment within the agreed-upon timeframe.

The consequences of unpaid invoices extend beyond financial strain. They can also lead to wasted time and resources spent chasing payments. In extreme cases, they can even threaten the survival of a business, particularly for small businesses operating on thin margins.

Importance of a Clear Credit Policy

A clear credit policy is a crucial tool in managing and preventing unpaid invoices. It sets the terms and conditions under which your business extends credit to customers.

This policy should outline your payment terms, credit limits, and procedures for dealing with late or non-payment. It serves as a guideline for your business and a contract with your customers, setting clear expectations for both parties.

Having a well-defined credit policy can significantly reduce the risk of unpaid invoices. It ensures that your customers understand their obligations and the consequences of non-payment.

Preventative Measures to Minimise Unpaid Invoices

Preventing unpaid invoices is far more efficient than dealing with them after they occur. By taking proactive steps, you can significantly reduce the risk of non-payment and protect your business’s cash flow.

These preventative measures involve careful planning and clear communication with your clients. They require a thorough understanding of your clients’ financial situation and a commitment to maintaining professional relationships.

Before Issuing an Invoice: Due Diligence Steps to Take

Before issuing an invoice, it’s crucial to conduct a credit check on your new clients. This can provide valuable insights into their financial stability and payment habits.

Before agreeing to take on a new client, our lawyers suggest the following steps be taken:

  1. Conduct a credit check on new clients
  2. Discuss and agree on payment terms
  3. Clearly outline the scope of work or products provided
  4. Ensure the client understands their payment obligations
  5. Request a payment on account as security for your invoice (such as retention in construction contracts)
  6. Sign up to our Free Insolvency Tracker and Claims Protection Service (worth £1k per year). Our revolutionary tracker protects your business from distressed clients. No more surprises. Our free service (worth £1k pa) alerts you to any financial issues or legal claims against debtors, helping you take immediate recovery action and limit financial exposure.

By taking these steps, you can set clear expectations and minimise the risk of misunderstandings that could lead to non-payment.

The Role of Clear Payment Terms and Prompt Invoicing

Clear payment terms are a crucial part of preventing unpaid invoices. They set the expectations for when and how payment should be made.

Your payment terms and contractual documents should be clearly stated on every invoice. They should include the due date, acceptable payment methods, and any late payment fees or interest charges.

Prompt invoicing is equally important. The sooner you send an invoice after a product or service is delivered, the sooner you can expect payment.

By combining clear payment terms with prompt invoicing, you can encourage timely payments and reduce the risk of unpaid invoices.

Strategies for Following Up on Overdue Payments

Even with the best preventative measures, some invoices may still become overdue. When this happens, it’s important to have a strategy for following up on these payments.

Your follow-up strategy should be consistent and professional. It should aim to maintain a positive relationship with the client (where necessary) while ensuring that your business gets paid.

Following Up Before and After Due Dates

Before an invoice’s due date, it can be helpful to send a reminder or demand for payment. This can be a friendly email or call to ensure the client is aware of the upcoming payment.

After the due date, your follow-up should become more assertive. If a payment is late, send a formal reminder stating the amount due and the consequences of non-payment.

Remember, it’s important to maintain professionalism throughout this process. Your goal is to get paid.

Implementing Late Payment Fees and Interest

Late payment fees and interest can be effective tools for encouraging timely payments. They provide a financial incentive for clients to pay their invoices on time.

To implement late payment fees and interest:

  • Clearly state any late payment fees or interest in your payment terms
  • Ensure your fees and interest rates are legal and reasonable
  • Apply these charges consistently to all late payments

By implementing late payment fees and interest into your contracts, you can discourage late payments and compensate your business for the inconvenience and cash flow issues caused by overdue invoices.

When all else fails, you may need to consider legal remedies for unpaid invoices. This is a serious step and should be considered carefully. It’s important to understand when it’s appropriate to take this route and how to prepare for it.

Our expert debt recovery lawyers have a 95% success rate in recovering unpaid invoices for clients, and most matters usually settle within a few weeks of our instruction. Call us for a Free Consultation today on 0207 459 4037 to discuss how we can help recover your unpaid invoice(s).

1. Statutory Demand

Requirement: Serve a statutory demand for debts over £750 as a precursor to insolvency proceedings (see further below). This formal demand requires payment within 21 days.

Applicability: Only suitable for undisputed, liquidated debts.

To find out more information on statutory demands, our expert debt recovery lawyers have recently written an article on the costs and the steps to issue and serve statutory demands here. If you have any questions, call us on 0207 459 4037.

2. Court Action

For Claims Under £100,000: Generally handled in the County Court.

For Claims Over £100,000: May be more appropriate for the High Court.

Requirement: Compliance with pre-action conduct and filing of claim forms, similar to the process for individuals (see further below) but tailored to commercial debts.

3. Insolvency Proceedings

Winding-Up Petition: If the statutory demand is not satisfied, a winding-up petition may be an option for debts over £750.

Requirement: The debt must be undisputed and liquidated. Initiating such action requires careful consideration due to its severe implications and the cost involved.

1. Letter Before Claim

Unless limitation is an issue in your claim, you are required to send a Letter Before Claim in compliance with the Pre-Action Protocol for Debt Claims. This letter should detail the debt, including the amount, the basis for the claim, and a clear deadline for payment.

Complying with the pre-action protocol encourages early settlement and compliance with legal protocols, reducing the need for court proceedings.

2. Court Claims

For Debts up to £10,000: You can consider the Small Claims Track, which is designed for less complex cases and limits the costs that can be recovered.

For Larger Debts over £100,000: Use the Fast Track or Multi-Track in the County Court, depending on the amount and complexity.

In either case, you will need to file a claim form and particulars of claim, outlining the debt owed and evidence supporting the claim.

3. Bankruptcy Proceedings

Statutory Demand: Before you can petition for an individual’s bankruptcy, you must first serve them with a statutory demand for the debt, which exceeds £5,000. This demand requires the debtor to pay the debt or secure it to the creditor’s satisfaction within 21 days.

Bankruptcy Petition: If the debtor does not satisfy the statutory demand, you can proceed to file a bankruptcy petition against them. This petition must be presented at court, specifically in the High Court or a County Court with insolvency jurisdiction, depending on the debtor’s location.

Applicability: Only suitable for undisputed, liquidated debts.

If you decide to take legal action, you will need to gather all relevant documentation and evidence. Our lawyers will typically require:

  • A copy of the invoice, showing it was sent and when it was due
  • Any communication about the invoice, such as emails or letters
  • Proof that the product or service was delivered as agreed
  • Any attempts you made to collect the payment
  • Any admissions or promises to pay the invoice

Having this documentation ready will help your case and make the process smoother. It’s another reason why good record-keeping is so important in managing unpaid invoices.

Case Example – £1.2m Recovered for Sub-Contractor plus 100% costs in less than 3 weeks

Client A approached our expert insolvency lawyers after receiving a fabricated attempt to dispute our client’s invoices.

Our construction dispute lawyers were able to recover a significant multi-million-pound sum of over £1.2m for the subcontractor in less than 3 weeks.

You can read more about our other Debt Recovery Success Stories here.

Expert Unpaid Invoice Solicitors with 95% Success Rate

Unpaid invoices can pose a significant risk to your business’s cash flow and financial stability. However, with the right strategies in place, you can minimise this risk and protect your business.

From implementing clear credit policies and payment terms to leveraging technology and professional services, there are numerous ways to manage and recover unpaid invoices. Remember, consistency and professionalism are key in this process.

If you are concerned about unpaid invoices or wish to protect your business for non-paying clients, please call us for a Free Consultation on 0207 459 4037 for a Free Consultation with our expert lawyers today. Our lawyers offer fixed fees and no win no fee agreements to recover your debt.


Karim Oualnan handled a contractual case to a successful resolution. Karim was very diligent, always providing great, honest advice in which Karim always put my best interests at the forefront of his suggestions during the case. He is very reliable, trustworthy and always on hand to help. I would highly recommend Karim.
I have no hesitation in recommending the services of Karim and his team. I had been banging my head against a brick wall after my bank forced the closure of my accounts and froze a substantial amount of my cash assets. Karim quickly reviewed all of the documentation relating to the matter and issued a letter before claim and formal...
We hired Karim for a commercial dispute, with a UK based entity that breached our P.O. terms. The difficulty with the case was that we have paid a down payment without much leverage to recover it. The supplier misled us forever 2 years and finally decided not to pay our down payment. However, with the support of the lead lawyer...
Very satisfied with the way that Karim Oualnan and his team took hold of a messy conveyancing professional negligence claim, and progressed it all the way through to an amicable settlement in just over 6 months. Professional, courteous, knowledgeable and also pragmatic with advice and strategy. I would not hesitate to recommend.
Karim offered me some advice regarding a lease issue. He was kind , courteous, knowledgable and above all really generous with his time and support . I would recommend Karim in a heartbeat for explaining things so clearly without patronising and for making me feel so at ease.
Karim is wonderful to work with, attentive, calmed and a knowledgeable professional. I appreciate his help a lot, he guided me in a way that not a lot of people does. Reliable and a great motivator.

Choose Excellence in Dispute Resolution

Our Mission

Our litigation solicitors have a proven track record of delivering successful outcomes for clients. Go Legal was founded to make exceptional lawyers accessible and solutions affordable.

Our lawyers and mediators have decades of experience and specialise exclusively in commercial litigation. Our lawyers have been described as “the best litigators in the country” & provide solutions to clients in the following areas of law:

karim sign

Karim Oualnan

Partner and Managing Director

Our Story

Having worked more than a decade in law and fuelled by his passion for access to justice, Karim envisaged a different law firm – one that stood as a symbol of hope, fairness, and an unwavering dedication to justice. By providing legal services through a partnership with Go Legal and Spencer West, Karim has been able to create this vision.

Karim did not have a storybook beginning. His childhood echoed with challenges, where he witnessed his family and friends struggle with legal issues. It made him realise that there are individuals and businesses caught up in the complexities of the UK legal system who need reliable, affordable and technically astute lawyers to get results.

Our lawyers make a promise – we will work hard to achieve the best outcome for you. We are here to help!

Our Values

Our firm’s values ensure that we consistently exceed client expectations. We are:

  • Honest: Our lawyers are trusted by many clients
  • Generous: We are technically astute lawyers with compassion, & a genuine desire to help
  • Dedication: Our lawyers tackle each case with relentless dedication & work tirelessly to achieve a successful outcome
  • Innovative: We have access to technology & strategies not used by other law firms
  • Guardians: Our lawyers will guide you through every legal step, ensuring clarity & understanding at all stages







*through our exclusive partnership with Spencer West LLP

Our lawyers are regulated and members of:

Why instruct Go Legal



Our team of award-winning legal experts are renowned for their technical expertise, honesty and dependability. We prioritise customer satisfaction by providing personalised attention and ensuring that we consistently exceed our clients' expectations throughout.

why icon 2

Rapid Response​

We understand the urgency of legal matters and offer 24/7 support to clients. Whether you require immediate assistance with legal advice or representation, our team is always available to provide prompt and reliable support. We will create a Whatsapp group with you and your legal team once instructed if you have any out of hours questions throughout your litigation and dispute resolution case.

why icon 3

Fair and Transparent pricing

We provide honest estimates for our legal services at the very outset. We are often instructed on an hourly rate basis, but we can offer discounted fixed fee packages, and no-win no fee agreements. For further information, please see our Funding page which sets out some of the packages we may be able to offer clients.

fast litigation and dispute resolution lawyers

Fast & Reliable

Efficiency and dedication to our clients’ needs are the cornerstones of our practice. We have earned the appreciation and praise of clients and even our opponents by consistently meeting high standards and delivering exceptional results.

why icon 5

Qualified and Regulated

Our team consists of highly qualified and regulated legal professionals who possess extensive knowledge and experience in dispute resolution. You can trust that your legal matter will be handled by specialist and experienced lawyers who provide the highest level of service to achieve the best result for your case.

why icon 1

Customer Satisfaction Guarantee

We are so confident in our ability that we give our clients a service level guarantee. If you are not happy with the service we provide on your case, you can request a 10% discount on our invoice(s) no questions asked.

1. Book Free Consultation

2. Our Lawyers will call you

3. We will represent your best interests to success

Schedule a Free Consultation

Select Date & Time below
Maximum file size: 10 MB
error: Content is protected !!

How can we help?

Resolving Payment Disputes: A Legal Guide for the UK Construction Sector

We are here to help you. Call us for your Free Consultation: 0207 459 4037

The Ultimate Guide to Construction Project Management: Legal Tips & Best Practices

We are here to help you. Call us for your Free Consultation: 0207 459 4037

The Complete Guide to Litigation Funding in England & Wales

We are here to help you. Call us for your Free Consultation: 0207 459 4037

The Essential Guide to Intellectual Property Protection in the UK

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Understanding Defamation: A Comprehensive Guide

We are here to help you. Call us for your Free Consultation: 0207 459 4037

A Comprehensive Guide to Preventing and Resolving Partnership Disputes

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Navigating Partnership Disputes: A Step-by-Step Guide

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Understanding Your Rights: A Guide to Financial Services Disputes in the UK

We are here to help you. Call us for your Free Consultation: 0207 459 4037

The Essential Guide to Resolving Financial Services Disputes in the UK

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Understanding Professional Negligence: An Introductory Guide

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Guide to starting a Professional Negligence Claim

We are here to help you. Call us for your free consultation: 0207 459 4037

Appealing HMRC Decisions: Your Rights and Procedures

We are here to help you. Call us for your Free Consultation: 0207 459 4037

A Guide to Alternative Dispute Resolution (ADR) in HMRC Disputes

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Best Practices to Minimise Bad Debts

We are here to help you. Call us for your Free Consultation: 0207 459 4037

How to start a Debt Claim

We are here to help you. Call us for your Free Consultation: 0207 459 4037

A Guide to Creditors' Rights in Insolvency Proceedings

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Crypto Recovery Group: Overview of Cryptocurrency Recovery& Fraud

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Cryptocurrency Tax Disputes: Navigating the Grey Areas

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Avoiding Insolvency: Early Warning Signs and Remedial Actions

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Navigating Corporate Insolvency: A Step-by-Step Guide

We are here to help you. Call us for your Free Consultation: 0207 459 4037

Preventing Shareholder Disputes: A Proactive Approach

We are here to help you. Call us for your Free Consultation: 0207 459 4037

The Legal Implications of Deadlock in 50/50 Owned Companies

We are here to help you. Call us for your Free Consultation: 0207 459 4037