Recover Unpaid Trade Invoices

What is a trade invoice dispute?

A trade invoice dispute arises when one business fails to pay another for goods supplied or services delivered under a commercial trading relationship. It is distinct from a consumer debt — the rules, the rights, and the recovery options are different, and in many cases more straightforward.

Trade invoice disputes typically fall into one of two categories. The first is simple non-payment — the invoice is not contested but the money has not arrived. The second is a disputed invoice — the other side is contesting the amount, the quality of goods or services, the contract terms, or whether the obligation to pay has been triggered at all.

The right recovery route depends on which situation you are in.

Your rights on unpaid trade invoices

Before pursuing recovery, it is worth understanding what you are entitled to claim.

Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses can add statutory interest to overdue trade invoices at 8% above the Bank of England base rate in force on the 31 December or 30 June before the debt fell due (11.75% for debts falling due in 2026). That rate stays fixed for the debt. You can also claim fixed compensation of £40, £70, or £100 depending on the size of the debt — per invoice, automatically, without a court order.

These rights apply from the date the payment became late. That is the due date in your contract or, if none was agreed, 30 days after the later of delivery of the goods or services and the customer receiving your invoice. They do not require a solicitor to calculate or claim.

A dispute does not remove these rights. If the other side contests the invoice and it turns out to be owed, interest and compensation still run from the original due date. The dispute itself still needs resolving.

Send a formal letter before action

If you have not already done so, a formal letter before action is the right first step. This puts the debtor on notice that you intend to take further action — through a neutral decision process or through the courts — if payment is not received within a set period. For a business customer, 14 days is usual. If the customer is a sole trader, the Pre-Action Protocol for Debt Claims applies: allow 30 days and include the protocol's information sheet and reply form.

Include the invoice amount, the statutory interest accrued, the fixed compensation sum, and a clear statement of your intended next step. A well-drafted letter before action sometimes produces payment on its own. It also prepares the ground properly for whatever comes next.

Use a private neutral decision service

For trade invoice disputes — whether the invoice is simply unpaid or actively contested — a private neutral decision service offers a binding resolution without court or solicitors, provided both parties agree to use it.

Both parties agree to appoint an independent neutral: an independent lawyer with at least 15 years' practical experience, acting as an expert, not an arbitrator. The neutral reviews the contract, the delivery records, the invoices, and the written submissions from both sides. There is no hearing. Neither party needs a solicitor. The neutral issues a binding decision based on the documents alone.

At Dispute Neutral, that decision is issued within 10 business days of the matter being ready. The fee is fixed in advance, in bands by claim size (from £650 plus VAT for disputes up to £4,000, rising to £1,500 plus VAT for disputes over £25,000 or a commercial decision not about money). The process is private. It covers trade debts and unpaid invoices between businesses up to £150,000 in England, Wales, and Northern Ireland.

This route works well for trade disputes because they usually turn on the documents: the order, the delivery records, the payment terms and the correspondence.

Issue a court claim

For straightforward unpaid trade invoices where the other side will not engage with any other process, a court claim remains an option. In England and Wales, claims up to £10,000 normally go to the small claims track, which is accessible without legal representation. Since 22 May 2024, defended small claims for a fixed sum of money are automatically referred to a free HMCTS mediation appointment. Northern Ireland has its own small claims limit, currently £5,000.

Larger claims in England and Wales go to the fast track, the intermediate track (claims of £25,000 to £100,000, since 1 October 2023) or the multi-track. Fixed recoverable costs apply on the fast and intermediate tracks, which limits the costs either side can recover from the other. Even so, each side's own legal costs, many of which may never be recovered, can quickly make the process disproportionate to the debt. That is why, for trade invoices up to £150,000, a neutral decision process will often be the more practical route.

Use a debt collection agency

For undisputed trade invoices where the debtor is simply not paying, a debt collection agency may be effective. They usually work on commission, taking a percentage of what they recover, and apply persistent pressure to prompt payment.

They have no power to resolve a genuine dispute about the invoice or the underlying contract. If the other side is contesting any aspect of the trade relationship, a collection agency will not produce a binding outcome on the substantive disagreement.

Why trade disputes suit a documents-based decision

Trade invoice disputes usually turn on the paperwork: whether goods met the specification, whether delivery obligations were fulfilled, whether payment terms were correctly applied, or whether a variation to the original order was properly authorised.

Through Dispute Neutral, those questions are decided by an independent lawyer with at least 15 years' practical experience, acting as an expert, not an arbitrator, on the documents and written submissions from both sides.

A note on construction work

If your invoice is for construction work for a business, such as building, installation or a trade on site, your contract is likely to be a “construction contract”. Under the Housing Grants, Construction and Regeneration Act 1996, either party has a statutory right to refer a dispute to adjudication, even if the contract says nothing about it. Neither side has to use that right, and the parties can agree to use Dispute Neutral instead. Supplying materials without installing them is usually not covered by the Act.

Many smaller jobs run on little more than a quote and an acceptance, with few written terms. That is why a Dispute Neutral clause in your terms of business helps: it sets out in advance how a payment dispute will be decided.

Work for homeowners is a consumer contract, so consumer law applies and Dispute Neutral cannot currently decide it.

What counts as a trade invoice for the purposes of this process?

A trade invoice is an invoice raised by one business against another for goods supplied or services delivered under a commercial contract. This includes invoices for physical goods, raw materials, components, wholesale supply, and commercial services provided in a trading context. It does not include consumer transactions, meaning sales to individuals acting outside a business. Sole traders buying for their business are covered.

What if the other side disputes the quality of the goods or services?

Quality disputes are among the most common trade invoice disputes and are well suited to a neutral decision process. The neutral reviews the contract specification, the delivery records, any correspondence about quality, and the written submissions from both sides — and issues a binding decision on whether the payment obligation has been triggered and, if so, in what amount. The clauses exclude matters that need expert evidence beyond simple material such as a schedule of defects.

Can I use Dispute Neutral if there is no written contract?

Yes, in many cases. Trade relationships sometimes operate on the basis of purchase orders, delivery notes, email exchanges, or established course of dealing rather than a formal written contract. The neutral will consider all relevant documents and communications in reaching a decision. The absence of a formal written contract does not prevent the process from working.

What happens if the other side refuses to engage with the process?

Both parties need to agree to use a neutral decision process. If the other side refuses, court or a debt collection agency may be the remaining options. However, many businesses that would resist court proceedings are willing to engage with a private, fixed-fee process — particularly when the alternative is a public claim that carries its own costs risks for both sides.

Ready to recover your unpaid trade invoices?

If you have an unpaid trade invoice or a trade debt dispute up to £150,000, and you and the other business both want a faster, more proportionate route to a binding outcome, Dispute Neutral is built for exactly this situation.

Private • Fixed fees • Binding decision within 10 business days of the matter being ready