How to Get Paid in Kenya: Invoicing, Debt Recovery and the Small Claims Court

A late invoice can become a collection problem in stages: the due date passes, follow-up goes unanswered, and the customer may dispute what is owed. Keeping a record at each stage helps you choose the next step.

Small Claims Court: Key facts

1. Why the paperwork decides who gets paid

A customer who owes you money has three questions to answer before paying: do I owe it, how much is it, and when was it due. If your records answer all three, most customers pay. If they do not, you have handed them a reason to stall.

That is why the paperwork does most of the work. A written term, a clear invoice and a clean record settle more disputes than any letter. The court is there for the cases that paperwork did not close.

2. What a proper invoice must carry

An invoice proves what you sold, to whom, and for how much. When it is vague, the customer has room to stall.

If you are registered for VAT, the law requires a tax invoice with prescribed details when you make a taxable supply. In practice that means the seller's name and PIN, the buyer's name and PIN (required where the buyer intends to claim the expense or the input tax), a serial invoice number, the date, a description of the goods or services, the quantity, the price, the VAT rate and the VAT amount, and the total.

Since 2024, the Kenya Revenue Authority requires businesses to issue invoices through the electronic Tax Invoice Management System, eTIMS. The duty covers every person carrying on business, whether or not they are registered for VAT. Two costs follow. A customer who is VAT-registered cannot claim input VAT on an invoice that misses the eTIMS rules. And from 1 January 2024, a business expense that is not supported by an eTIMS invoice is not deductible for income tax, under section 16(1)(c) of the Income Tax Act. KRA has exempted certain expenses from that validation, and there is a manual route for eligible business expenses that a TIMS/eTIMS invoice does not support, provided the expense was wholly incurred to generate taxable income. Both land on your customer, which gives them one more reason to sit on your invoice until it is fixed, so it pays to get it right the first time.

If you are not registered for VAT, the eTIMS duty still applies to you, and your customer's income tax deduction usually depends on it, so issue the electronic invoice the same way. Your paper invoice still needs the same fields, minus the VAT lines, plus your payment terms and the date payment is due. The buyer's PIN is required only where the buyer intends to claim the expense or the input tax.

3. Setting payment terms you can enforce

Payment terms are the thing you enforce later.

Two rules make terms work. Put them in writing before you start, and repeat them on every invoice. A term that only ever existed in a phone call is a term you will struggle to prove.

4. The paper trail that wins a claim

The Small Claims Court is not bound by the strict rules of evidence that apply in the higher courts. It can accept oral testimony, written records and documents. That helps you, and it rewards anyone who kept records.

Keep these, because each one answers a question the debtor will raise:

• a signed order, quotation acceptance or contract;
• the invoice and proof it was delivered, such as an email or a WhatsApp message;
• delivery notes signed on receipt;
• M-Pesa or bank records showing part payment, which support your claim that the debt existed;
• your follow-up messages, which show the date the payment was chased.

An M-Pesa statement showing a partial payment is powerful: it supports your claim and is hard for a customer to deny. It does not by itself prove the whole amount you are claiming, so keep the invoice and the delivery records as well.

5. Chasing the debt without going to court

Many debts are collected at this stage, without going to court.

Start with a friendly reminder close to the due date, then a firm one, then a formal letter of demand. A demand letter states the amount, the basis of the debt, the due date, and a final deadline before you file. Give a short, fixed window, and keep a copy.

If your contract sets late payment interest, state it in the demand. If it does not, ask for the principal and let the court handle interest on any judgment.

Keep every message. A file of unanswered reminders is itself evidence that you tried to resolve the matter before suing, which courts expect.

6. The Small Claims Court: what it can hear

The Small Claims Court was created by the Small Claims Court Act, which came into force in April 2016 and was amended in 2020. It sits as a subordinate court and is meant to be within reach in every sub-county.

It hears civil claims on:

• a contract for the sale and supply of goods or services;
• a contract relating to money held and received;
• loss or damage to property, or the delivery and recovery of movable property;
• compensation for personal injuries;
• a set-off or counterclaim under any contract.

The limit is KES 1,000,000. A few matters are excluded: defamation, libel, slander, malicious prosecution, disputes over title to or possession of land, and employment and labour relations. You also cannot split one large claim into several small ones to fit the limit.

If your claim is worth more than KES 1,000,000, you have two choices. You can abandon the excess and claim the maximum here, or file in the Magistrate's Court. If you abandon the excess, you give up that part; you cannot later sue for it separately (Small Claims Court Rules, rule 3(6)).

7. Filing a claim: where, how, and what it costs

File at the court nearest to where the transaction took place, or where the respondent lives or carries on business.

The claim starts with a Statement of Claim in the prescribed form, filed at the registry with the fee. It can also be presented orally, and it can be filed electronically. You then serve the claim on the respondent. If you do not serve it within six months, the claim is treated as abandoned, though it can be reinstated once (Small Claims Court Rules, rule 7(3)). The court will not reinstate a claim arising from a contract entered into more than six years before the application, or one relating to an accident more than three years before it (rule 7(4)).

The respondent has fifteen days to file a response under the Act, while the Rules set fourteen days for a respondent within the local limits and thirty days for one outside them. Follow the served court notice and confirm the deadline with the registry. If no response comes, the court can enter judgment in your favour. Once the case is running, the court must determine it within sixty days of filing.

Filing fees

Service fees

Fees change, so confirm the current schedule at the registry before you file. The published bands use "more than… but less than…", so for a claim exactly on a boundary confirm the fee with the registry.

You do not need a lawyer. A party can appear in person, through a duly authorised representative, usually a close relative, or through an advocate. Since the 2020 amendment advocates may appear, and their fees are regulated by the Chief Justice. The court may also refer the matter to mediation or another form of alternative dispute resolution with the parties' consent.

8. What happens after judgment

A judgment in your favour is an order to pay. It can require a lump sum or instalments. If the debtor still does not pay, you can enforce it: the court can order attachment and sale of movable or immovable property, or the attachment of the debtor's salary. Enforcement adds cost: the fees recoverable on execution of a decree do not exceed ten per cent of the aggregate value of the subject matter, together with disbursements (Small Claims Court Rules, fee schedule, item 8).

If either side is unhappy with the decision, an appeal lies to the High Court on matters of law only, and the High Court's decision is final. On costs, the court may order the losing party to pay the winner's costs, or it may leave each side to carry its own.

9. The six-year clock

A contract debt must be sued on within six years of the date it fell due, under the Limitation of Actions Act. Miss that window and the debt becomes hard to enforce. The six years can restart: a written and signed acknowledgment of the claim, or a payment towards it, gives the right of action a fresh accrual from that date (sections 23(3) and 24(1)).

The clock is why a slow chase is a losing chase. Every month you wait moves you closer to a debt you can no longer recover in court. If you intend to claim, keep the file moving.

10. When to cut your losses

Not every debt is worth chasing. A KES 5,000 debt against a customer you cannot find will cost more in time and fees than it is worth. Set a rule for yourself: a threshold below which you write it off, and a hard point at which you either demand or file.

Writing off a bad debt is part of the cost of selling on credit, and it is usually cheaper than chasing it forever.

11. Cautions before you sue

Before you file, check three things. The debt is within the six-year window. The respondent is someone the court can reach. And the amount is one the court can hear. If the respondent has vanished and has no assets, a judgment you cannot enforce is a piece of paper.

Where the customer is still trading and wants to keep the relationship, a firm demand letter usually beats a filing. The court is there for the cases that demand letters do not close.

Key facts