When a customer hasn’t paid for goods you supplied, the situation can quickly become stressful. The problem is more common than many people realise. In the UK, 62% of small businesses say they are owed money from unpaid invoices, with each business owed an average of £21,400.
With figures like that, late invoices have a real impact on cash flow and can force businesses to chase customers more firmly or pass overdue accounts to Debt Collection. Many companies also lean on Outsourced Credit Control to keep payments coming in on time. If you are facing a situation where a customer hasn’t paid, you might wonder whether you can simply reclaim the goods. This guide explains what the law says and what practical steps you can take.
Why You Cannot Just Reclaim Goods When a Customer Hasn't Paid
It can feel reasonable to collect goods when the customer hasn't paid, especially if you supplied materials, delivered a product or installed items on site. However, the Sale of Goods Act 1979 states that ownership usually transfers to the buyer when the goods are delivered. That means the goods legally belong to the customer, even if you have not been paid.
If you decide to visit the customer and remove items without legal permission, you risk being accused of trespass, theft or causing damage. This includes items you installed yourself, such as lighting, boilers or building materials.
How a Retention of Title Clause Can Help
A Retention of Title clause (often called RoT) can change when ownership passes. Instead of ownership transferring on delivery, this clause allows you to state that you still own the goods until you receive full payment. This can give you a stronger position if the customer hasn't paid, but there are limitations to be aware of.
The goods must be identifiable. Labelling, serial numbers and clear packaging help, but if items have been unpacked, mixed with similar goods or stored alongside products from another supplier, it may become difficult to prove which are yours.
Goods also need to remain intact. Items that have been installed, used, processed or built into another product are often impossible to recover in practice. Perishable goods may have already spoiled, so the clause is of little use.
You might also require a contractual right of entry to retrieve goods. Without it, you cannot lawfully enter premises to collect them.
Construction work carries additional complications. Materials frequently become the property of the employer once included in a payment certificate. Once they become fixtures, ownership transfers regardless of any RoT clause unless you have an agreement directly with the employer.
A Retention of Title clause is useful, but it needs to be drafted professionally and realistically suited to the type of goods you supply.
What To Do When a Customer Hasn't Paid
If you are dealing with a situation where a customer hasn't paid, there are several steps you can take that keep you on the right side of the law.
Your first step should be to contact the customer. Often the issue is administrative, such as a missing invoice or a misunderstanding about dates. Clear communication at this stage can prevent the matter from escalating.
Keep good records, including invoices, delivery notes, order confirmations and any written communication. These documents will be important if you need to escalate the matter.
If you have a valid Retention of Title clause, and the goods remain unused and easy to identify, you may be able to agree to a voluntary return. This avoids legal processes and can help preserve the commercial relationship.
If continued chasing does not work, you may need to escalate the account to Debt Collection. Using a professional service often encourages faster payment and removes the pressure from your team.
Many businesses reduce these situations by using Outsourced Credit Control, which handles reminders, monitoring and chasing overdue invoices on your behalf. This helps maintain steady cash flow without employing full-time staff.
Some companies also use credit recovery firms such as CreditXS to escalate overdue accounts before they become bad debts. This approach can reduce losses and help you resolve issues earlier.
Why Reclaiming Goods Often Fails
Even with the right contract wording, there are many times when reclaiming goods is not realistic:
Goods that have been installed, assembled or integrated into another product cannot usually be taken back.
- If the customer has resold the goods, they may no longer be available.
- Spoiled or damaged goods will no longer hold value.
- Goods that are identical to others in storage may not be identifiable as yours.
These issues show why prevention and strong credit control practices are more reliable than attempting recovery after the event.
How to Avoid Issues When a Customer Hasn't Paid
Prevention is far more reliable than attempting to recover goods later. Before offering credit, assess the financial stability of your customers. Continue reviewing their payment habits because circumstances can change quickly. Contact customers before invoices are due and follow up immediately when payments are late. Reduce or remove credit limits when necessary and consider placing late payers on hold until invoices are settled.
For many small businesses, managing late payments internally is difficult. This is where Outsourced Credit Control provides real value by handling payment reminders and debt prevention. It can cost less than hiring staff but still delivers consistent and professional credit management.
Protect Your Business When Customer Payment Is at Risk
In conclusion, when a customer hasn’t paid, reclaiming goods yourself is rarely an option because ownership usually transfers on delivery. Without a clear Retention of Title clause and identifiable goods, recovery is often impossible.
Strong credit control, early communication and timely escalation give you the best chance of resolving overdue invoices. Services such as Outsourced Credit Control and Debt Collection help prevent unpaid invoices turning into serious cash flow problems.
If you want support recovering overdue invoices or improving your credit control processes, contact My Credit Controllers today. We are here to help you get paid sooner and protect your business.
