Being owed money by a company is a common but serious issue for UK businesses. Chasing unpaid invoices is time consuming, disrupts cash flow and can quickly become stressful — especially for smaller businesses without a dedicated accounts receivable team.
Research suggests around half of all UK B2B invoices were overdue in the past twelve months, which shows how widespread the problem has become.
With over 70 years' experience recovering commercial debt as an FCA-authorised and regulated firm, we've supported businesses of all sizes through this process. This guide explains the options available if another company owes you money, and how to decide the best next step for your business.
How to deal with a company that owes you money
Every case has its own differences, but the steps below cover what you might need to do if another business owes you money — some are basic checks you can carry out yourself, others may need help from an expert.
Confirm it's non-payment, not a genuine dispute
One of the most common mistakes we see is assuming every unpaid invoice is a refusal to pay. Often delayed payment comes down to a soft dispute rather than bad faith — and escalating too quickly can damage the relationship and weaken your position later.
Common soft disputes
The invoice was not received, or went to the wrong person
A purchase order number was missing
Accounts are asking for proof of delivery or completion
Payment is in the next run but hasn't been scheduled
The invoice is waiting on internal approval
How to clear the blockers
Re-send the invoice to the right person with the reference in the subject line
Attach a statement of account showing all outstanding balances
Confirm your bank details and acceptable payment methods
Include the contract, purchase order and proof of delivery where relevant
Key point
Confirm the invoice is actually due under the agreed payment terms and contractual requirements.
Politely but clearly ask the debtor whether there is a reason the invoice isn't being paid.
Keep a paper trail from the beginning — emails, invoices, statements, explanations for non-payment. If the debtor still doesn't pay and can't point to a clear contractual issue, you are no longer dealing with a normal delay, and it's reasonable to treat the account as genuine non-payment.
Put your credit control in writing
When informal reminders haven't worked, move to formal written credit control. This is a pre-legal step and it doesn't mean being aggressive — it means clear, documented and time-bound next steps that remove ambiguity for both parties.
Formally confirm the outstanding balance
A statement of account showing what is owed, invoice numbers, original due dates and payment methods proves you've removed the practical barriers to settlement.
Set a clear payment deadline
A specific date replaces "as soon as possible", signals you are taking the matter seriously, and avoids the delay loop.
Offer two routes forward
Payment in full by the deadline, or immediate contact to agree a payment plan. Whatever is agreed should be confirmed in writing.
Make the escalation path clear
Not a threat of legal action — simply stating that failing to engage will result in further steps creates leverage while staying pre-legal.
Handle partial disputes carefully
Explain that the undisputed portion should still be paid in full while the remaining issues are dealt with separately.
Suspending services or pausing supply may be appropriate in some cases, but only where the contract allows it — otherwise you risk giving the debtor a valid claim against you. Keep documenting everything: correspondence, deadlines given, promises to pay.
Add statutory interest and compensation
In many B2B cases, charging statutory interest and late payment compensation on overdue invoices is a legal right. The Late Payment of Commercial Debts Act exists to discourage late payment and compensate businesses for the time and cost of chasing what they are owed.
Statutory interest is an amount you can add to overdue commercial invoices at 8% above the Bank of England base rate, accruing from the day after the original due date. You can often also add a fixed late payment charge on top, ranging from £40 to £100 depending on the size of the debt.
These charges can't be applied in every situation. Your contract may preclude statutory interest if a different rate was agreed, or if a substantial remedy for late payment is already built into the agreement.
Check your contractual terms before applying late payment charges. If you are entitled, use an official calculator to work out the interest due and update your statement of account. Showing the debtor that the cost of delay is rising encourages settlement.
Send a Letter Before Action
If written credit control hasn't succeeded, a Letter Before Action is the next step. It is the first stage of potential legal escalation — and often enough on its own to prompt payment without taking the matter further.
An LBA (also called a Letter Before Claim) is a formal pre-action notice setting out exactly what is owed, why, what the debtor can do about it, the deadline, and what happens if it isn't met.
What an effective LBA includes
The parties involved
The total owed and why it is owed
Relevant invoice references and original due dates
A brief summary of the steps already taken
A firm deadline, and a clear statement of what happens next
Supporting documents
It's safest to have a lawyer or another professional help draft it — exaggerating legal claims or including incorrect threats can harm your case later. There are also rules about the pre-action steps you must take before bringing a claim to court, and failing to satisfy them can bring sanctions.
Timing matters
When to involve a debt collection agency
Contrary to widely held belief, a collection agency is not a last resort for debt you've written off. Involving specialists earlier is a commercial decision that significantly increases the chance of recovery — particularly with repeat late payers, long-overdue balances with no clear explanation, or amounts too large to ignore.
Elevates urgency
A third party raises the seriousness of the matter for the debtor without initiating legal proceedings.
Protects the relationship
Escalation happens at arm's length, so the commercial relationship isn't strained further than it already has been.
Saves your team's time
Especially where there is no dedicated credit control function to chase the invoice week after week.
Find a reputable partner who will work in your interests. At STA that means transparent pricing, open communication, a 24/7 online dashboard, and both pre-legal support and legal escalation through our in-house law firm, STA Legal.
Choose how to escalate
At this point the question shifts from "should I keep chasing?" to "what's the best way to escalate?". Each route has its own trade-offs between likelihood of recovery and cost.
Option A — a court claim
A formal process to obtain a judgment confirming the money is owed. Most appropriate where documentation is clear, you've taken ample earlier steps without engagement, and you believe the debtor can pay but is choosing not to. Note that judgment only confirms the debt — many debtors still delay payment afterwards.
If you win but still aren't paid — enforcement
Find out what the debtor can afford. Ask the court to order evidence of income or spending, then decide on further action.
Send bailiffs to take control of goods. A warrant of control can escalate to a bailiff visiting the business to find assets that may be sold.
Freeze money in an account. A third-party debt order freezes funds a third party holds for the debtor, commonly a business account balance.
Charge the debtor's land or property. A charging order usually prevents the debtor selling the property without first paying off the charge.
This isn't an exhaustive list. There are rules to follow, fees to pay, and different application routes depending on the amount owed — an expert can help you pick the route that recovers the most without unnecessary cost.
Option B — statutory demand or winding up
Where a limited company owes an undisputed debt, the threat of insolvency-based action often produces fast resolution. Take care: you must show the company is unable to pay its debts as they fall due, court fees are expensive, the process is slow, and even a successful petition may recover little or nothing.
Option C — negotiate a settlement or payment plan
Formal legal action can produce a worse outcome than a negotiated arrangement. This route works best where the debtor's business is commercially viable but has a short-term cashflow problem — a structured plan over several months may still be quicker and more effective than the legal alternatives. Document the amounts, deadlines and consequences of non-payment.
There is no cut-and-dried answer. The best option is the one that recovers the most money in the most efficient way — not necessarily the most aggressive one.
Special situations
Standard recovery works in most cases, but some situations change the approach entirely — going down the normal route would waste time and money.
The company has gone into administration
Normal recovery action is usually paused. You'll likely need to register your claim with the administrator and wait — available assets are distributed by creditor ranking, secured before unsecured.
The company is insolvent or in compulsory liquidation
You should receive a report to creditors and may need to submit a proof of debt. As an unsecured creditor you will be among the last to be paid, and often there is little left after insolvency costs and secured creditors.
The debtor is overseas
Cross-border recovery takes longer and costs more, and the process varies widely with where the assets sit and what your contract says. Use an agency that specialises in international recovery, and act early.
Keep limitation periods in mind
A limitation period is the legal time limit for bringing a claim to recover a debt. Miss it and you lose some of the legal options to enforce payment.
In England and Wales the period for most commercial debts is six years from the date payment became due; five in Scotland. It can reset on formal acknowledgement of the debt or a partial payment. Northern Ireland is governed by separate legislation. An expired period doesn't always mean the debt is unrecoverable — it means certain actions are no longer available, which is why starting early matters.
How to avoid being owed in the first place
Diligent credit control mitigates the risk long before an invoice ages.
Check before you supply
Basic checks on new customers, verified company information, and a low starting credit limit while trust is established.
Write unambiguous contracts
Clear terms encourage payment without argument and make genuine non-payment easier to identify early.
Take deposits or stage payments
On larger projects this reduces the risk of total non-payment and secures at least part of the value up front.
Monitor terms and behaviour
Prompt invoicing and watching for clients who stretch terms keeps problems small enough to solve without escalation.
Next step
Every case is different. Tell us what's outstanding and we'll tell you the most sensible route to recovery — and whether it's worth pursuing.
This guide reflects UK law and practice as of 2026. It is general commercial guidance and does not constitute legal or financial advice. Scottish and Northern Irish law differ in several material respects, particularly on limitation periods and enforcement.
