Stopping supply for unpaid debt

Hello! Dealing with a customer who owes you money can be very stressful and bad for your cash flow. I am here to help you work out the best way forward.

The short answer is that whether you can just stop supplying them depends almost entirely on what was agreed in your contract or your terms and conditions.

The legal position:

Under the law of England and Wales, you do not automatically have the right to stop supplying goods or services just because a customer is late paying an invoice. Unfair as it might sound, if you stop supplying without a clear legal or contractual right to do so, you could actually be in breach of contract yourself. Your customer could then potentially try to claim against you for any losses they suffer because you stopped their supply.

However, contracts very often include specific rules that give you the right to suspend or end services if a payment is overdue.

Missing details to consider:

To give you an exact answer, it would be important to know what your written agreement or terms and conditions actually say, whether your customer is another business or a consumer, and whether they are ignoring the bill entirely or refusing to pay because they are unhappy with what you supplied.

Practical next steps:

1. Check your contract. Read through your terms and conditions or the written agreement you have with the customer. Look for any section about payment, late payment, suspending services, or termination. If you have a clause that clearly says you can suspend supply if a payment is late, you are in a much stronger position to simply pause your work.

2. Open a conversation. Sometimes an unpaid bill is just an oversight, or the customer might be having a temporary cash flow problem. Give them a polite call or email. Asking them gently when you can expect payment is often the quickest way to solve the problem without damaging the business relationship.

3. Ask if there is a dispute. Make sure the customer is not holding onto the money because they think there was a problem with your goods or services. If they have a complaint, you will need to look into it and try to resolve it with them directly.

4. Send a formal written warning. If they are just ignoring you, write them a clear letter or email. Attach a copy of the overdue invoice. Remind them that the payment is late, state the exact amount owed, and give them a final clear deadline to pay. If your contract allows you to suspend supply, kindly but firmly warn them that you will have to pause your services on a specific date if the bill is not settled.

5. Offer a payment plan. If they want to pay but are struggling financially, it might be more practical for you to agree a sensible payment plan so they can pay the debt off in standard instalments. This keeps the money coming in and helps keep things friendly.

6. Take further action. If you have tried all of the above, your contract allows it, and they still refuse to pay, you might choose to formally pause your supply. At this stage, you can start looking into debt recovery options. This might involve using an early mediation service, sending a formal Letter Before Action, or eventually making a claim in the county court, depending on how much money is involved and whether the customer has the funds to actually pay you.

I hope this helps you figure out your best next move. Please feel free to ask if you would like to talk about what goes into a formal written warning or how the debt recovery process works.