How to Chase Late Payments as a UK Contractor (7-Stage System)

If you're a UK tradesperson, you've almost certainly dealt with a client who won't pay on time. You're not alone — 87% of UK contractors report experiencing late payment at some point, and the average small business is owed over £8,500 in overdue invoices at any given time.

The good news? UK law is firmly on your side. The bad news? Most contractors don't know their rights, and end up writing off money they're legally entitled to.

This guide walks you through exactly how to chase late payments, stage by stage, so you get paid what you're owed without burning client relationships unnecessarily.

Your Legal Rights as a UK Contractor

Before you send a single reminder, you need to understand what the law says. Under the Late Payment of Commercial Debts (Interest) Act 1998, every UK business has the statutory right to:

• Charge interest at 8% above the Bank of England base rate on any overdue invoice
• Claim fixed compensation for debt recovery costs: £40 for debts up to £999.99, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more
• Recover reasonable costs of chasing the debt

These rights apply automatically to all business-to-business transactions. You don't need to include them in your contract for them to apply — though it's always better if you do.

If no payment terms were agreed, the law assumes a 30-day payment period from the date the invoice was sent or the work was completed, whichever is later.

The 7-Stage Payment Escalation System

Rather than sending one angry email and hoping for the best, the most effective approach is a structured escalation. Here's the system we recommend — and the one built into Certi's automated payment chasing.

Stage 1: Friendly Reminder (Day 1 Overdue)

The day after your payment is due, send a polite reminder. Most late payments are caused by genuine oversight — the client forgot, the invoice went to spam, or their accounts person is off sick.

Keep it casual and professional. A simple email or text: "Hi [Name], just a quick reminder that invoice [number] for £[amount] was due yesterday. Could you let me know when I can expect payment? Thanks."

No threats. No mentions of interest. Just a nudge.

Stage 2: Follow-Up (Day 7)

If you haven't heard back after a week, send a second reminder. This time, include the full invoice details — amount, date, job reference — and ask if there's an issue.

"Hi [Name], following up on my previous message about invoice [number] for £[amount], which was due on [date]. Is everything okay with the payment? Please let me know if there are any questions about the invoice."

Stage 3: Firm Payment Notice (Day 14)

Two weeks late and no response? It's time to be direct. Send a formal payment notice stating the amount owed, the original due date, and a request for immediate payment.

This is where you first mention that continued non-payment may result in additional charges. You're not threatening — you're informing them of their legal obligations.

Stage 4: Late Payment Warning (Day 21)

At three weeks, you send a formal warning that references the Late Payment Act specifically. Include the amount of statutory interest that has now accrued and the fixed compensation fee you're entitled to.

For example, on a £2,000 invoice that's 21 days late with a base rate of 4.75%, the statutory interest would be approximately £14.70, plus a £70 compensation fee.

Stage 5: Final Demand (Day 30)

One month late. This is your final demand before you escalate to formal proceedings. The letter should include:

• The original invoice amount
• The number of days overdue
• The total statutory interest accrued
• The fixed compensation amount
• A deadline of 7 days for payment
• A clear statement that failure to pay will result in further action

Stage 6: Letter Before Action (Day 45)

If the final demand is ignored, you send a Letter Before Action (LBA). This is a formal legal document that warns the client you intend to begin court proceedings if payment isn't received within 14 days.

An LBA carries serious weight. Most clients pay at this stage because they know what comes next. The letter should state the total amount owed including all interest and compensation, and give a specific final deadline.

Stage 7: Debt Recovery or Court Action (Day 60)

If the LBA is ignored, you have several options:

• Money Claim Online (gov.uk) — for debts under £100,000, you can file a court claim online. The fee starts from £35 for claims up to £300.
• Small Claims Court — for debts up to £10,000, you can represent yourself without a solicitor.
• Debt collection agency — they'll chase the debt on your behalf, usually for a percentage of the amount recovered.
• UK Small Business Commissioner — a free government service that can intervene in late payment disputes.

How to Calculate Late Payment Interest

The formula is straightforward:

Debt × Interest Rate × (Days Late ÷ 365) = Interest Owed

The interest rate is always the Bank of England base rate plus 8%. So if the base rate is 4.75%, you charge 12.75%.

For example, a £5,000 invoice that's 45 days late:

£5,000 × 12.75% × (45 ÷ 365) = £78.60 in interest, plus £70 fixed compensation = £148.60 in additional charges.

Don't want to do the maths yourself? Use our free Late Payment Interest Calculator to work out exactly what you're owed.

Prevention Is Better Than Chasing

The best way to deal with late payments is to prevent them happening in the first place:

1. Use written contracts — verbal agreements are hard to enforce. Digital contracts with e-signing create a legal paper trail.
2. Set clear payment terms — state your payment deadline on every quote and invoice. 14 or 30 days is standard.
3. Invoice immediately — don't wait until the end of the month. Send the invoice as soon as the job is done.
4. Take deposits — for larger jobs, require a deposit before starting work. 25-50% is normal in construction.
5. Automate your reminders — manual chasing is easy to forget when you're busy on site. Automated systems send reminders for you.

Stop Chasing Manually

If you're spending hours every week chasing invoices by text and email, you're losing money twice — once on the unpaid invoice, and again on the time you could be earning.

Certi's 7-stage automated payment escalation does all of this for you. When an invoice goes overdue, the system sends escalating reminders on your behalf, calculates statutory interest automatically under the Late Payment Act, and gives you letter templates for every stage.

You focus on the tools. Certi handles the chasing.

Try Certi free for 10 days — no credit card required. Visit certi.website to get started.