Non-payment from a client can materially affect cashflow and divert management time as it is spent chasing the outstanding debt. To effectively secure payments, evidence of the transaction and account should be preserved in order to establish a strong case for maximum recovery.
The first formal step is to verify the payment terms in the contract, which includes but is not limited to:
- The amount owed
- The payment deadline
- Any milestone schedule
- Late-fee or interest clauses n
- Notice requirements
- Dispute process that must be followed.
In parallel, remember to document your deliverables as promised: the signed contract, emails confirming scope approval, proof or delivery, notes from meetings, and any unpaid invoices. This evidence will support your position in negotiations and, if needed, in formal enforcement proceedings.
Non-payment could sometimes stem from an unclear or disputed invoice. Where this is a risk, consider reissuing the invoice with itemised charges, a clear due date and straightforward payment instructions. A brief professional reminder email attaching the invoice can be sent to the client, referring to the relevant contractual payment clause. If you discuss matters over the phone, promptly send a follow up email summarising the conversation as keeping a written record is crucial if the issue needs to be escalated later.
If the contract permits suspension for non-payment, use that right carefully and consistently. Confirm the outstanding balance in writing and provide a clear deadline for payment before pausing services. Where you provide platform access, ongoing support, or deliverables that have not yet been released, suspension can be an effective prompt for settlement. However, avoid making threats and do not withhold anything you are legally or contractually required to provide.
A demand letter is often the turning point. It should clearly set out the background by outlining what was agreed and what was delivered, specify the sum due and how it was calculated, and a strict payment deadline, typically within 7–14 days. If the contract permits, include any applicable interest or late-payment fees. The letter should state what will happen if payment is not received by the deadline, such as referral to solicitors or debt collection, commencing mediation or issuing a claim. Where appropriate, a solicitor’s letter can add credibility and urgency.
Before beginning legal action, ensure all necessary preliminary steps are taken and adhere to any contractual Alternative Dispute Resolution (ADR) provisions, such as mediation or arbitration. If negotiation fails, an appropriate forum should be selected; typically, a small claims process for lower-value disputes and the civil courts for higher-value or more complex matters. When bringing the claim, you should seek the main debt alongside any contractual or statutory interest and any costs you are entitled to recover under the relevant rules.
If you obtain judgment and the client still does not pay, you may need to take enforcement action. Depending on the jurisdiction and the debtor’s circumstances, options can include instructing enforcement agents or bailiffs, applying for an attachment of earnings order, seeking a charging order over property, or applying for a third-party debt order to recover sums held by a bank or another third party. The most suitable route will depend on what assets or income the debtor has and where they are located.
Nath Solicitors are a boutique law firm with over 30 years’ legal experience. We provide expert advice on contracts and agreements. If you need assistance, please call us on 0203 983 8278 or email us at enquiries@nathsolicitors.co.uk.