What happens if a customer doesn't pay an invoice?

Most of the time, nothing dramatic: a reminder, a late fee under the Late Payment of Commercial Debts (Interest) Act 1998, and eventually payment. If it drags on, the usual escalation is a formal letter before action and then the small claims court. None of that changes if the customer has actually stopped trading, which is why it's worth checking their status before you spend more time chasing a company that may not exist to chase.

Is not paying an invoice illegal?

Not paying on time isn't a crime, but it's a breach of contract, and UK law gives you the right to charge statutory interest and a fixed compensation fee once payment is late. If a company never pays because it has gone into administration or liquidation, that isn't illegality either, it's insolvency, and your claim joins the queue of everyone else the company owes.

Should I keep chasing, or check their status first?

Check first. It takes two minutes and changes what chasing even means. If the company is trading normally, a polite reminder usually works. If it has entered administration, chasing the old contact won't help: you need a Proof of Debt to the administrator instead, and every day you don't know that is a day you're not doing the one thing that actually matters.

Administrator.uk

Customer hasn't paid? Before you chase again, check if they've gone under.

By the administrator.uk editorial teamLast reviewed 2 July 2026

Most of the time an unpaid invoice is exactly what it looks like: a dispute, a cash-flow squeeze, an admin error, a customer who genuinely forgot. But every so often it's the first sign of something else, and chasing a company that has actually stopped trading wastes time you don't have. The check takes two minutes. Do it before you send another reminder.

In one minute

Most late invoices are ordinary, not a sign of anything worse.
Check the company's status first, before you spend more time chasing.
Still trading? A normal reminder, then the usual escalation, still applies.
In administration or liquidation? Chasing the old contact won't help; you need a Proof of Debt instead.
Not in either, but something feels off? That's a different, quieter pattern worth watching.

Before you assume the worst

Most late invoices are ordinary

A disputed line item. A cash-flow squeeze that has nothing to do with solvency. An invoice that landed in the wrong inbox. A customer who is, simply, disorganised. Most of the time one of these is the real explanation, and the right move is the one you'd expect: a polite reminder, then a firmer one, then statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 if it drags on.

None of that changes because you checked the company's status first. It just means you're not guessing.

The two-minute check

Is the company still trading?

Search the company on administrator.uk, or check Companies House and The Gazette yourself for a winding-up petition, a Notice of Intention to Appoint Administrators, or a completed appointment. The full walkthrough, including exactly where to look and what each result means, is on how to check if a company is in administration.

Three outcomes, and each one changes what you do next.

Outcome one

Still trading normally

Chase as you normally would. Nothing about the insolvency angle applies, and the standard playbook (reminder, formal letter before action, small claims court if it comes to that) is the right one. That playbook is well covered elsewhere; this page isn't the place to repeat it.

Outcome two

Already in administration or liquidation

Chasing the customer's usual contact stops being useful. What you need instead is a Proof of Debt to the administrator or liquidator, and an understanding of where your unsecured claim actually ranks. The full guide, including typical recovery rates and what to do this week, is on what happens to your unpaid invoice when a customer goes into administration.

Outcome three

Not (yet) insolvent, but something feels off

No formal filing, but the payment is late in a way that doesn't feel like the usual excuse, or it's the second time this quarter. That's a quieter, earlier pattern than a confirmed insolvency, and it's covered on warning signs a company is in financial trouble.

Next time

Don't find out from a bounced payment.

Add this customer, and up to four others, to your free list. Confirmed emails you the day one enters administration, so you're checking their status because we told you, not because a payment went missing. Protect goes further, with the earlier warning signs and no limit on how many companies you watch.

Start free →

Frequently asked

Common questions

What happens if a customer doesn't pay an invoice?: Most of the time, nothing dramatic: a reminder, a late fee under the Late Payment of Commercial Debts (Interest) Act 1998, and eventually payment. If it drags on, the usual escalation is a formal letter before action and then the small claims court. None of that changes if the customer has actually stopped trading, which is why it's worth checking their status before you spend more time chasing a company that may not exist to chase.
Is not paying an invoice illegal?: Not paying on time isn't a crime, but it's a breach of contract, and UK law gives you the right to charge statutory interest and a fixed compensation fee once payment is late. If a company never pays because it has gone into administration or liquidation, that isn't illegality either, it's insolvency, and your claim joins the queue of everyone else the company owes.
How can I quickly check if a company has gone out of business?: Search the company on administrator.uk, or check Companies House and The Gazette directly for a winding-up petition, a Notice of Intention to Appoint Administrators, or a completed appointment. See the fuller walkthrough on how to check if a company is in administration.
Should I keep chasing, or check their status first?: Check first. It takes two minutes and changes what chasing even means. If the company is trading normally, a polite reminder usually works. If it has entered administration, chasing the old contact won't help: you need a Proof of Debt to the administrator instead, and every day you don't know that is a day you're not doing the one thing that actually matters.