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Managing Finances

How to get invoices paid

Updated: 6 August 2020

For small business owners, getting invoices or other debts paid can be crucial to your success. Spending hours chasing them is not only a poor use of time but can create a lot of stress, particularly if cash flow is tight. To help you understand what you can do to get your invoices paid, we’ve put together a short guide of steps you could take.

What steps can I take?

It can feel daunting or uncomfortable chasing people for money, but there are steps you can take that don’t require big legal teams. Actions you can take include:

  • Sending a demand letter – a formal notice of the debt owed
  • Sending a letter before action – notifying them that you’ll take the claim to court if it’s not paid
  • Go to the small claims court – file your claim and try to get a legal judgement for them to pay

Let’s look at each step in more detail. 

A demand letter

You’ve tried chasing them by phone and email but it’s looking like they still won’t pay. At this point you might consider sending a demand letter. This is a formal letter detailing exactly what is owed and the actions you’ll take if it is not paid. 

Depending on your relationship with the debtor (the person or body that owes you money) you may want to use a more friendly approach to begin with. If that’s not necessary or the claim is urgent, you may want to proceed straight to a letter before action. 

A letter before action

You’ve sent a demand letter and not heard back. It may now be time to consider using the small claims court. Before doing so, you need to send them a letter before action. This details the claim and states you’ll proceed to the small claims court if it is not paid. 

You can find templates for demand letters and letters before action at sites like, where you can get a free trial.

Go to the small claims court

The small claims court is available for claims up to £10,000. Once you submit your claim, it may go to a trial if the debtor submits a defence. If no defence is submitted, or the defence has no real prospect of winning, a judge may rule on it without going to trial. You can download an overview of how the process works here:

All information is correct at time of publishing. While we want to help as much as we can, the information and documents found here are provided solely for informational purposes and should not be considered legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here.

If you have any questions, please speak to your professional adviser or seek independent legal advice.

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