Start by chasing the invoice in writing, then send a formal letter of demand claiming statutory late payment interest and compensation if the customer is a business. If the debt is still unpaid, you can raise a court action: simple procedure in the sheriff court for claims up to £5,000, or ordinary cause for larger amounts. Once you have a court decree, sheriff officers can enforce it by arresting bank accounts or wages.
Step one: check the basics
- Is the invoice correct? Make sure it matches what was agreed, is addressed to the right legal entity and gives clear payment terms.
- Is there a dispute? If the customer is unhappy with the work, deal with that first, as a disputed debt takes longer to recover.
- Who owes the money? A limited company, a sole trader and a partnership are pursued in different ways. Check Companies House if you deal with a company.
- Is the debt in time? Most contractual debts in Scotland are extinguished after five years under the Prescription and Limitation (Scotland) Act 1973, unless a claim is made or the debt is acknowledged.
Step two: chase, then send a letter of demand
Send a polite reminder when the invoice falls due, then follow up by phone and email. If that fails, send a formal letter of demand setting out the amount, what it is for, the interest and compensation you are claiming, and a deadline, usually 14 days, after which you will raise court proceedings without further notice. Keep copies of everything.
Statutory late payment interest and compensation
If you and your customer are both businesses, the Late Payment of Commercial Debts (Interest) Act 1998 applies across the UK, including Scotland, unless your contract provides a substantial alternative remedy. You can usually claim:
- Interest at 8% a year above the Bank of England base rate.
- Fixed compensation for each invoice: £40 for debts under £1,000, £70 for debts of £1,000 to £9,999.99, and £100 for debts of £10,000 or more.
- Reasonable recovery costs above those fixed sums in some cases.
Where no payment date was agreed, payment is usually treated as due 30 days after the later of delivery or the invoice.
Tip: put clear payment terms in your contracts and on your invoices, including the right to statutory interest. Customers who know you will claim it often pay sooner.
Step three: court action
Claims up to £5,000: simple procedure
Simple procedure in the sheriff court is designed to be used without a solicitor. You complete a claim form, usually online, and pay a court fee. If the customer does not respond, you can ask for a decision in your favour. Our guide on taking someone to the small claims court in Scotland explains each step, including fees and expenses.
Claims over £5,000: ordinary cause
Larger debts are raised under ordinary cause procedure in the sheriff court, or in the Court of Session for high-value cases. Ordinary cause is more formal, and most businesses instruct a solicitor. If the customer does not defend the action, decree can often be granted relatively quickly. If you win, you can usually recover a contribution towards your legal expenses.
Step four: enforcement (diligence)
A court decree does not guarantee payment. If the debtor still does not pay, sheriff officers can carry out "diligence", including:
- Charge for payment: a formal demand giving the debtor 14 days to pay.
- Arrestment of funds: freezing money in the debtor's bank account.
- Earnings arrestment: deductions from an individual debtor's wages.
- Attachment: seizing certain business assets.
For larger debts, insolvency proceedings, such as sequestration of an individual or winding up a company, may be possible, but these have wider consequences and should only be considered with advice.
Is it worth pursuing?
Before going to court, consider whether the debtor can pay. Check Companies House filings, any insolvency notices and whether the business is still trading. A decree against a company with no assets may not be worth the cost.
Getting help
For larger or disputed debts, a solicitor can send a formal demand, raise proceedings and handle enforcement. Compare the leading civil litigation solicitors in Glasgow, or see our ranking of commercial and business solicitors for help with contracts and payment terms.
Frequently asked questions
How do I recover an unpaid invoice in Scotland?
Chase it in writing, send a formal letter of demand, then raise a court action if needed: simple procedure for claims up to £5,000, or ordinary cause for larger debts.
Can I charge interest on a late invoice in Scotland?
Yes, if both parties are businesses. The Late Payment of Commercial Debts (Interest) Act 1998 allows interest at 8% above the Bank of England base rate, plus fixed compensation.
How much compensation can I claim for a late payment?
£40 for debts under £1,000, £70 for debts of £1,000 to £9,999.99, and £100 for debts of £10,000 or more, per invoice.
How long do I have to recover a debt in Scotland?
Most contractual debts are extinguished after five years under the Prescription and Limitation (Scotland) Act 1973, unless a claim is made or the debt is acknowledged.
What happens if the debtor ignores a court decree?
Sheriff officers can enforce it through a charge for payment, bank arrestment, earnings arrestment or attachment.
Do I need a solicitor to recover a debt?
Not for simple procedure claims up to £5,000. For larger or disputed debts, most businesses instruct a solicitor.
Conclusion
So, how do you recover an unpaid invoice in Scotland? Chase it, send a letter of demand claiming statutory interest and compensation, then use simple procedure or ordinary cause if needed, followed by enforcement. Act well within the five-year prescription period and check that the debtor can pay.
Compare the leading civil litigation solicitors in Glasgow for help with larger or disputed debts.