How to Recover an Unpaid Invoice

Last post: Apr 24, 2018

A guide to facing the dilemma of unpaid invoices as an SME.

At some point, every small business owner will face the dilemma of having to recover an unpaid invoice. As an SME, you depend on payment from your clients to pay your staff, cover overheads, and effectively run your company. When someone fails to comply with an invoice, it can be extremely stressful and upsetting.

This simple guide from Sage explains the standard procedures for recovering an invoice.

When you submit an invoice, government guidelines explain that the client has 30 days to pay unless you agreed to other payment terms. Before this period has passed, the invoice is not considered late. After 30 days, the following actions can be taken:

  • +2 days – First recovery email
  • +9 days – Second recovery email
  • +10 days – First recovery phone call
  • +17 days – Second recovery phone call
  • +24 days – First formal recovery letter
  •  +38 days – Formal demand letter

After 38 days, you have the option of pursuing four slightly more drastic options: mediation services, statutory demand, and court action. If these options don't work, your last resort is to sell your debt to a third-party debt collection agency.

Mediation services: A private and confidential way of resolving a dispute between yourself and the debtor.

Statutory demand: A written warning by the creditor which prompts court proceedings if missed payment.

Court action: Self-explanatory route of taking the debtor to court for the missed payment(s).