Payment terms, and what to do when nobody pays

Make sure the invoice is right

The commonest reason an invoice sits unpaid isn’t reluctance. It’s that it got stuck somewhere: with the wrong person, without a purchase order number, or with a description the accounts team can’t place.

With larger customers, ask up front how their payables work. Which address, which reference, and who has to approve it. That one phone call prevents more arrears than any reminder. What has to be on the document itself is set out by Revenue under the information required on a VAT invoice — the date of issue, a unique sequential number, your name, address and registration number, the customer’s name and address, what you supplied and when, the amount excluding VAT, the rate and the VAT payable. Most of it you already put in the quote.

And a small point that matters when you start counting days: an invoice sent by post or by electronic transmission counts as received in the normal course of that service unless someone shows otherwise. You don’t have to prove it landed.

What you’re entitled to when payment is late

Once the relevant payment date has passed you’re owed three things, and they’re implied into every commercial transaction by S.I. 580/2012 — so they apply without the necessity of a reminder and without anyone having agreed to them. This isn’t a negotiation.

• Statutory late payment interest for the period the debt was unpaid. The rate is the European Central Bank main refinancing rate plus 8 percentage points — and the rate is fixed per half-year: the ECB rate in force on 1 January applies until 30 June, the one in force on 1 July applies until 31 December. So it’s a formula that moves twice a year, not a fixed figure.
• Compensation for recovery costs, with no need to show you incurred any cost at all: €40 on an invoice up to €1,000, €70 above €1,000 up to €10,000, and €100 above €10,000.
• Reasonable compensation for any recovery costs above that fixed sum — the legislation names instructing a solicitor or employing a debt collection agency as examples.

Interest runs from the day after the relevant payment date until the day the money arrives. The department’s own worked example: a debt of €1,000 paid 25 days late, at the rate of 10.4% that applies from 1 July 2026 (the ECB rate of 2.40% plus the 8 points), is €1,000 × 25 × (10.4% ÷ 365) = €7.12.

Which tells you something useful about where the money actually is. On a small invoice the interest is pocket change and the €40 is the real figure; on a €12,000 invoice run sixty days late the same sum comes to €205.15 and the €100 is the afterthought. Work out both before you write anything down.

Two practical notes. Don’t invoice for the interest and compensation — the department is explicit about this: you write to the purchaser telling them that, as payment is late, you’re now seeking late payment interest and compensation costs. And say it in advance: put on your invoice that statutory late payment interest and compensation apply to overdue accounts. You can always choose to waive it as a gesture, and plenty of suppliers do, which is a perfectly good use of the entitlement. Claiming it afterwards when you never mentioned it rarely goes well.

One caveat on the rate, because it’s easy to miss. Between businesses the parties are allowed to agree a different amount of statutory late payment interest by contract, provided the varied amount isn’t grossly unfair to you. So if a customer’s standard terms set their own late payment rate, read that clause before you calculate anything — and know that an attempt to strip the entitlement out altogether is exactly what the grossly-unfair test exists for.

Finally, who this applies to: commercial transactions between undertakings, and between an undertaking and a public authority. A private individual buying for themselves is a consumer and falls outside these rules entirely, and so does a debt caught up in insolvency proceedings.

A sequence that keeps the relationship intact

This is the heart of it: the first steps aren’t debt collection, they’re service. Go legal straight away and you lose a customer over an invoice that had usually simply been overlooked.

1. Day 1 after the due date: ring, don’t email. Friendly and factual: "I can see invoice 2026-114 is still outstanding — is there something not right with it?" Half the time there’s a practical reason and it’s sorted within a week.
2. Day 7: written reminder. With the invoice number, the amount, a new date, and notice that statutory late payment interest and compensation apply after it.
3. Day 14: a final reminder with a hard date. This is where the tone changes. Name a specific date and what happens after it.
4. After that: formal recovery. Note that the Small Claims Procedure is not the route here — it’s cheap and it’s open to businesses, but debt claims, including unpaid invoices, are specifically excluded from it. An undisputed invoice goes as an ordinary civil claim: the District Court for a claim up to €15,000, the Circuit Court up to €75,000. A debt collection agency takes a share of what it collects instead. Either way you’ll need your written steps as evidence — and remember the cost of the solicitor or the agency is itself recoverable on top of the fixed sum.

If the customer is much bigger than you

There’s a route here that suppliers consistently forget, and it exists precisely for terms that were never really negotiated. If a term of the contract waives or waters down your entitlement to interest — or, where the contract specifies no payment date at all, the statutory thirty days — and you consider that grossly unfair, you can apply to the Circuit Court for an order: that the term is grossly unfair, that it’s unenforceable, that it’s replaced by the statutory position, or that the purchaser compensates you for what the term cost you. It’s also the same test that decides whether a term longer than sixty days stands in the first place — the rule that sets that limit points at this one for what grossly unfair means.

What the court weighs is worth reading before you decide whether you have a case: good commercial practice, the nature of the goods or services, whether the purchaser has any objective reason to deviate from the regulations, the strength of the two bargaining positions relative to each other, and whether you had any realistic opportunity to contract elsewhere without accepting a similar term. Those last two are the ones that describe a small supplier sitting opposite a large buyer.

You don’t have to go to court for it. You can instead ask the purchaser in writing to agree an arbitrator; if there’s no agreement within fourteen days of a written request, either side can apply to the President of the Law Society of Ireland to appoint one. The Arbitration Act 2010 applies, the determination binds both parties, and either side can appeal to the High Court on a point of law.

And where the problem is a set of terms used with everybody rather than your contract alone, a representative body — an organisation with a legitimate interest in representing small and medium-sized enterprises, generally or in your sector — can apply to the Circuit Court to have those terms declared grossly unfair and unenforceable, and their continued use prohibited. That’s a route that doesn’t need you to be the one in the courtroom.

Less formally, there’s the Prompt Payment Code: a voluntary code supported by the Department of Enterprise, Tourism and Employment and by business organisations, whose signatories pledge to pay suppliers within the terms agreed at the outset or within thirty days. It has no enforcement behind it and signing is nobody’s obligation. But the register of signatories is public, and a customer who put their name to that pledge and is running you at ninety days is in an awkward position when you mention it — which, for a late payer with a procurement department and a reputation to mind, is often the thing that moves.

Record it against the customer

Every reminder, every call and every promise belongs in the record. Three lines each time, with the date.

You need that for two reasons. Practically: if it comes to a claim, you have to be able to show what you did and when. And commercially: after a year you can see which customers are habitually late, and that’s information that belongs in your next quote — as a shorter term, or as payment up front.

Prevention is mostly agreement

Four things that make the most difference, and you sort all four before the work starts rather than afterwards.

Say when you invoice. On completion, in stages, or up front. A customer who knows that in advance has arranged their cash flow around it.

Ask for a deposit on larger jobs. Thirty per cent at the start is normal in many trades and removes the biggest risk.

If you supply goods, agree retention of title. Expressly agreed before delivery, it means you keep title to the goods until they’re paid for in full. It costs one sentence in the contract and it’s the only one of these four that gives you something back rather than a claim.

Put your payment terms in the quote as well as on the invoice. Not only in your terms and conditions — nobody reads those. What else belongs in there is in the piece on writing a quote.

This is an explanation, not legal advice

If it’s a large amount, a customer who looks like going under, or a dispute about the work itself, take it to a solicitor. The periods and figures above are the main rules of S.I. 580/2012 as amended, read on 15 November 2026; there are exceptions that turn on the facts, the interest rate changes every 1 January and 1 July, and contracts predating 16 March 2013 sit under the older regulations.