Guide

Chasing late payment without losing the customer

Last reviewed 12 September 2026

Most late payment is disorganisation, not refusal. A process that escalates on a schedule recovers the money and keeps the relationship, and it starts before the invoice is even sent.

The trades who get paid on time are not tougher than everybody else. They are more predictable. The customer knows what happens on day one, day seven and day fourteen, because it was written down before the work started.

Prevention, which is most of it

Put the payment period, the bank details and the late payment consequences on the quotation, not only the invoice.
Invoice the day the stage completes. Do not batch invoices to the end of the month.
Make sure the invoice carries whatever the customer's accounts system needs, particularly a purchase order number on commercial work. A missing reference is the most common cause of a payment that was never actually refused.
Confirm receipt. "Just checking the invoice reached you and is in for payment on the 28th" catches the problem a fortnight before it becomes a debt.

The escalation, on a schedule

Set the dates in advance and follow them without emotion. Each step should be slightly firmer than the last and none of them should be angry.

Day 1 overdue: a short, friendly message. Assume it was overlooked, because it usually was. Attach the invoice again.
Day 7: a phone call, then confirm what was agreed in writing. A call finds out what is actually going on, which an email never does.
Day 14: a formal reminder in writing, stating the sum outstanding, the original due date, and that statutory interest and compensation will be applied from the due date on a business debt.
Day 21: a letter before action. Set out the debt, what you will do next, and give a clear deadline of seven or fourteen days. Say that you will begin court proceedings without further notice if it is not paid.
After that: act on it. A threat you do not carry out teaches this customer, and everyone they talk to, that your deadlines are decorative.

Find out whether it is a dispute

Somewhere in the first two steps, establish whether the customer is unable to pay, disorganised, or unhappy with the work. They need completely different responses. A genuine complaint that surfaces on day 21 has already curdled, whereas the same complaint raised on day 2 is usually a half-day of making good and an invoice that then gets paid in full.

Statutory interest on business debts

On a business to business debt the Late Payment of Commercial Debts (Interest) Act 1998 gives you interest at 8 per cent above the Bank of England base rate, running from the day after payment was due, plus fixed compensation of 40 pounds under 1,000 pounds, 70 pounds up to 9,999.99 pounds, and 100 pounds at 10,000 pounds and above. Reasonable recovery costs above that sum can also be claimed.

You can waive it as a gesture once payment is made, and often should. But claim it on the reminder, because it is the part that makes an accounts department move your invoice up the pile.

The two construction-specific levers

On a commercial construction contract you have rights a general supplier does not have. If a payment is not made in full by the final date and no valid pay less notice was served, you can give seven days' written notice and then suspend performance, recovering your costs and an extension of time. And you can refer the dispute to adjudication at any time, with a decision normally within 28 days that is binding until finally determined. Adjudication is fast enough to be a real threat, and the threat alone settles a large share of disputes.

Court, as a last resort

For straightforward undisputed debts the county court money claim service is inexpensive and largely administrative, and the small claims track handles claims up to 10,000 pounds without needing a solicitor. Judgment is only worth having against somebody who can pay, so check whether the company is still trading and solvent before spending the fee.

Learn from it

Every bad debt teaches you something about how the job was set up: too little deposit, stages too far apart, no purchase order, or a customer whose own client had not paid them. Change the terms for the next job rather than resolving to be more careful, because being more careful is not a system and it does not survive a busy month.

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This guide is general information for UK trades, written by the BidReady team. It is not legal, tax or financial advice. Rules change and individual circumstances differ, so take professional advice before acting on anything that matters.