Late payment invoices: what a tradesman can chargeLate payment invoices: what a tradesman can charge

Late payment invoices are one of the biggest cash problems for UK tradespeople, and many do not know the law lets them charge interest and a fixed fee when another business pays late. This guide sets out what GOV.UK says you can claim, how to chase politely and firmly, and how to make late payment less likely in the first place. It is general information, not legal advice.

When is an invoice late?

GOV.UK’s late commercial payments guidance applies when another business is late paying for goods or a service. It does not cover private customers. If you did not agree a payment date, the payment is late 30 days after the customer receives your invoice, or 30 days after you deliver the goods or provide the service, whichever is later.

If you did agree a date, it should usually fall within 60 days for business transactions. You can agree a longer period between businesses, but it must be fair to both sides. This is why a clear payment date on every quote and invoice matters.

What you can charge

Interest

GOV.UK says statutory interest is 8 per cent plus the Bank of England base rate for business-to-business transactions. You cannot claim statutory interest if your contract sets a different rate. If you decide to add interest to the amount owed, send a new invoice for it. The interest page has the detail.

Fixed debt recovery costs

On top of interest, GOV.UK’s debt recovery costs page lists fixed sums by size of debt:

• Up to £999.99: £40.
• £1,000 to £9,999.99: £70.
• £10,000 or more: £100.

You can charge the business once for each payment. As a supplier you can also claim reasonable costs each time you try to recover the debt.

A chasing routine that keeps the customer

Most late payers are not refusing. They have lost the invoice, or it is stuck in someone else’s approval queue. A calm, regular routine gets most of them paid without a fight:

1. Send the invoice the day the work is signed off, with the due date and how to pay on the first page.
2. A day or two before the due date, send a short reminder with the invoice attached again.
3. On the day after it is due, ask whether there is a problem and whether they have what they need to pay.
4. A week later, ring someone, ask who approves payment and agree a date. Follow up in writing.
5. If there is still no payment, tell them you will add interest and the fixed costs, and send that invoice.
6. For a larger debt, take advice. GOV.UK’s guidance links to making a court claim for money.

Keep each step short and polite, and keep a note of dates. If it does go further, a clear record of every message is what you will need.

What to put in your payment terms

Terms do not need to be long, but they do need to be written down before the work starts. A good set for a trade business covers:

• The payment date, or the number of days after the invoice date.
• How to pay, and who to contact about an invoice.
• That statutory interest and fixed recovery costs may be charged on business accounts paid late.
• Any deposit or stage payments, and when each falls due.
• How a dispute about part of an invoice should be raised, so the undisputed part can still be paid.

Because GOV.UK says you cannot claim statutory interest if your contract sets a different rate, read your terms before you send a reminder that mentions interest.

Make late payment less likely

• Put the payment terms on the quote, so nobody is surprised at the invoice.
• Invoice straight after the job, while the customer is happy.
• Make it easy to pay: online payment removes the excuse of not having the details.
• Chase on a timetable, not when you remember.
• For big jobs, agree stage payments in writing before you start.

How jobmate helps

In jobmate, invoices are created from the job, and the dashboard shows Outstanding and Overdue counts so you can see what needs chasing without hunting through a spreadsheet. The customer portal lets customers pay invoices online through Stripe, and the Xero integration keeps your accounts up to date. Chasing is still your call: jobmate shows you what is overdue, and you decide what to say.

If you want your costs and invoices in the same record, see expenses and job costing.

Late payment: common questions

Can I charge interest to a private customer?

GOV.UK’s late commercial payments guidance is about one business paying another, so do not assume it applies to a household. Check your own terms and take advice for consumer debts.

How much interest can I charge?

8 per cent plus the Bank of England base rate, unless your contract sets a different rate. The base rate changes, so check the current one when you calculate it.

Do I have to charge the fixed fee?

No. It is a right, not a duty. Many firms mention the possibility of charging in a polite reminder, then waive it when payment arrives. That is your decision.

When should I start chasing?

Before the due date. A friendly reminder two days early prevents more late payments than any letter sent after.

Next step

To see how a job becomes an invoice and how you can see what is overdue, Book a demo.