Chasing unpaid invoices: a UK guide for tradespeople

Before you chase, check your side

The quickest payments come from invoices nobody can argue with, so start by making sure yours is right. Check that the customer actually received it, that the amount matches what was agreed, that the bank details are correct, and that there is a clear due date. If you never agreed a payment date, GOV.UK says the customer must pay within 30 days of getting your invoice or the work, so the clock may not have run out yet. Our free invoice template covers everything an invoice must show.

A polite reminder sequence that works

Most late payers are disorganised rather than dishonest, so the first reminders should make paying easy, not start a fight. Each step gets a little firmer. The timings below are a sensible rhythm, not a legal requirement, so adjust them to suit the customer.

If the customer raises a genuine complaint about the work, deal with that first. Chasing harder over a real dispute rarely gets you paid sooner.

Business customers: the Late Payment Act

When your customer is a business, the Late Payment of Commercial Debts (Interest) Act 1998 gives you rights that strengthen your hand. The Act applies to contracts where the purchaser and the supplier are each acting in the course of a business, so it covers jobs for landlords' companies, main contractors, shops and offices, but not householders.

When a payment counts as late

GOV.UK says a payment is late after the date you agreed. If no date was agreed, it is late 30 days after the customer gets the invoice or after you do the work, whichever is later. Agreed payment terms should usually be within 60 days for business transactions, or 30 days for public authorities, and a longer period between businesses must be fair to both sides.

Statutory interest

You can claim statutory interest at 8% plus the Bank of England base rate. GOV.UK points out that you cannot claim statutory interest if your contract sets a different interest rate. To work out the amount, multiply the debt by the yearly rate to get a year's interest, divide by 365 for the daily figure, then multiply by the number of days the payment is late. GOV.UK's interest page links to the current and past base rates.

Fixed compensation and recovery costs

Once statutory interest starts to run, section 5A of the Act also entitles you to a fixed sum for the cost of recovering the debt:

If your reasonable costs of recovering the debt are more than the fixed sum, the Act lets you claim the difference too. Say clearly in your firm reminder that you are adding interest and compensation under the Act, and show how you worked it out.

Householders and other domestic customers

The Late Payment Act does not help you here, because it only covers contracts where both sides are acting in the course of a business. That makes the groundwork more important: agree the price and payment terms in writing before you start, and on bigger jobs consider asking for a deposit or stage payments so you are never carrying the whole cost yourself.

If a householder will not pay, the formal route starts with the Pre-Action Protocol for Debt Claims. It applies when a business, including a sole trader, claims a debt from an individual, and that includes a customer who is a sole trader. Before you start a court claim you should send a Letter of Claim that sets out the amount owed, whether interest or charges are still being added, what the debt is for and how to pay. You enclose an up-to-date statement of account, the Information Sheet and Reply Form from the protocol, and a Financial Statement form. The customer then has 30 days from the date on the letter to respond before you go to court.

You cannot add statutory late payment interest to a householder's bill, but if the matter goes to court you can include interest in your claim. GOV.UK says the rate is usually 8%, and the court decides whether to award it if you cannot agree.

Small claims: making a court claim for money

If reminders and a letter before claim do not work, you can apply to the county court to claim money you are owed by a person or business. GOV.UK notes this used to be known as taking someone to the "small claims court". The steps below apply in England and Wales; Scotland and Northern Ireland have their own processes.

1. Claim online or by post. You can claim online through Money Claims Online unless you do not know exactly how much you are claiming, you are claiming for more than one person or organisation, or your claim is against three or more people or organisations, a government department, or someone without an address in England or Wales. Otherwise use paper form N1.
2. Have their details ready. For an online claim you need the name, address and email address of the person or business you are claiming from.
3. Pay the court fee. The fee depends on how much you are claiming, plus any interest. It starts at £35 for claims up to £300, and the full table is on GOV.UK's fees page. You may be able to get help with fees.
4. Include interest if you want it. Interest has to be in the claim from the start. GOV.UK says that a business claiming from another business can use the late payment rules above instead of the usual 8%.
5. Be open to settling. You may not need a hearing at all if the customer agrees to pay or you reach an agreement through mediation, which the court may arrange for free depending on the amount.

If your claim is complex, GOV.UK suggests getting legal advice first, and Citizens Advice and Advicenow can help too. If you win and still are not paid, GOV.UK explains how to enforce a judgment.

Let Graft'd do the chasing

Chasing is the job nobody wants at nine o'clock at night. In Graft'd, you can switch on automatic chasing for an invoice. Once it is overdue, Graft'd emails your customer a reminder at 7, 14, 21 and 30 days overdue, starting friendly and getting firmer each time, with your business name on it. If the customer pays part of the bill, it only chases what is still owed. Every invoice can also carry your bank details and your own payment link, which removes the most common excuse of all.