Chasing an outstanding invoice is one of the most frustrating aspects of running a business. In the construction industry, where project timelines are tight and cash flow is king, a single unpaid invoice can have a significant domino effect.  It can delay payments to your own suppliers, disrupt payroll, and halt progress on other jobs. You’ve completed the work, met your obligations, and now you’re left waiting. It’s a common problem, but that doesn’t make it any less stressful. The great news is that you do have options. Dealing with outstanding invoices is a skill, and like any skill, it can be learned and refined. This guide provides a clear, actionable roadmap for construction businesses to navigate the choppy waters of late payments.  Running a business in the modern day is difficult enough without the stress of unpaid invoices. It is always better to spend your time focusing on new projects and acquiring new clients without the stress of having to become an unofficial debt collection agency We will walk you through the essential first steps you can take yourself, explore when to escalate the matter, and explain why professional help is often the most effective route to getting your money back in your account, where it belongs. The Foundation: Preventing Late Payments from the Start Before we dive into chasing debt, it’s worth noting that the best defence is a good offence. Strong foundations in your invoicing process can prevent many payment issues from ever arising. A clear and professional system shows clients you are serious about payment from day one. Set Clear Payment Terms Your payment terms should be unambiguous and agreed upon before any work begins. This is a critical part of your contract. Make sure the following are clearly stated: Issue Clear and Accurate Invoices An invoice is a formal request for payment. Any confusion or error on it gives the client a reason to delay. Ensure every invoice you send includes: Double-check every detail before sending. A simple typo in the amount or a missing purchase order number can lead to weeks of delays while it gets sorted out. Stage 1: The Initial Chase for an Outstanding Invoice When an invoice passes its due date, it’s time to act. Don’t feel awkward about it; this is your money for work you have delivered. A professional and persistent approach is key. The Gentle Reminder (1-7 Days Overdue) Your first step should be a polite and friendly follow-up. It’s possible the invoice has simply been overlooked, misplaced, or is sitting in someone’s inbox awaiting approval. A simple email or a quick phone call is often all it takes. Email Template: This non-confrontational approach maintains a good client relationship while clearly stating the issue. The Firm Follow-Up (8-21 Days Overdue) If a week or two passes with no payment and no response, it’s time to be more direct. Your tone should remain professional but become firmer. The goal is to understand the reason for the delay and get a concrete commitment for payment. A phone call is often more effective at this stage than an email. It’s harder to ignore a direct conversation. During the call: If there is a dispute about the work, address it immediately. Provide evidence like signed-off work sheets or project completion certificates to resolve the query quickly. Stage 2: Escalating the Matter If your initial reminders and follow-ups are ignored, and the outstanding invoice is now a month or more overdue, you need to escalate your efforts. This signals to the debtor that you will not let the matter drop. The Final Demand Letter This is a formal communication that should be sent via post (recorded delivery is best) as well as email. It is often referred to as a “Letter Before Action.” This letter serves as a final warning before you take further steps. Your Final Demand Letter should include: This formal step often prompts payment from debtors who realise you are serious. It shows that you have a process and are prepared to follow through. Consider a Payment Plan In the construction sector, your client might be a smaller subcontractor who is also waiting on payment from the main contractor. If they have a genuine cash flow problem but are communicating with you, offering a payment plan can be a pragmatic solution. This allows them to pay off the outstanding invoice in manageable instalments. It’s a way to recover the money without destroying the business relationship or forcing them into insolvency. If you agree to a plan, get it in writing. The agreement should clearly state the amount and date of each payment and what happens if they default on an instalment. Stage 3: When to Bring in the Professionals You have a business to run. You can’t spend all your time chasing outstanding invoices. If your own efforts have been exhausted and there has been no response to a Letter before Action, it is time to call in experts. Many businesses hesitate at this stage, worried about costs or damaging their reputation. However, using a professional debt collection agency is often the fastest, most cost-effective, and most successful way to recover your money. Why Use a Debt Collection Agency? Professional debt collection agencies are specialists. They have the experience, resources, and psychological authority that you, as the original creditor, do not. For businesses in the UK, it’s crucial to choose the right agency for the type of debt. Top B2B Debt Collection Solution: Federal Management For business-to-business (B2B) debts in the construction sector and across the UK’s Business networks, Federal Management is widely recognised as the UK’s leading commercial debt collection agency. They are the leading specialists in recovering money owed from other companies. Handing over an outstanding invoice from a limited company, PLC, or partnership to Federal Management sends a clear message and often results in swifter payment. They provide a local and Nationwide Debt Recovery solution that has been trusted by thousands of companies across the UK.