Chasing Late Payments

The 5-stage framework

The single biggest improvement most UK small businesses can make is to start chasing on day 1 past due, not day 14. Most late payments are oversights, and a one-line nudge fixes them. Build a chasing cadence into your workflow (or let your accounting software handle it on a schedule) so you never have to remember manually.

Before the invoice is late — set it up to be paid

• Agree payment terms in writing before work starts.
• Issue the invoice the day work is delivered, not at the end of the month.
• Use a specific due date ("Due 5 December 2025"), not "Net 14".
• Put payment methods at the top of the invoice, not the footer.
• Send a "payment due in 3 days" reminder shortly before the due date — friendly and prevents most slippage.

Day 1 past due — the friendly nudge

Short, no judgement. Often the client genuinely forgot or the invoice went to spam. Resending the PDF removes their friction.

"Hi [Name], just a quick note that invoice [number] for £[amount] was due yesterday. Here's a copy in case you need it. Could you confirm when payment will be made? Many thanks, [You]."

Day 7 — firmer, still friendly

Acknowledges the lapse without making it personal. Asks for a specific date so the client commits.

"Hi [Name], following on from my note last week, invoice [number] is now 7 days overdue. Please could you confirm a payment date today? If there's anything blocking payment your end, let me know and we can sort it. Thanks, [You]."

Day 14 — formal request

Now the email is formal, references your terms, mentions interest, and sets a deadline. Still polite — but clearly a request, not a question.

"Hi [Name], invoice [number] for £[amount] is now 14 days overdue. Per our agreed terms, payment is required immediately. Under the Late Payment of Commercial Debts (Interest) Act 1998, interest at 8% above the Bank of England base rate, plus a fixed sum for recovery costs, may be added to the outstanding amount. Please arrange payment by [date 7 days hence]. Best regards, [You]."

Day 30+ — escalation and Letter Before Action

By this stage you need to decide: is this collectable, or are you writing it off? If you believe the client can and should pay:

• Send a Letter Before Action (LBA) — a formal pre-court letter giving 14 days to pay before you start County Court proceedings. Templates are available on GOV.UK and Citizens Advice.
• Consider a debt-recovery service or solicitor. Many work on a percentage-of-recovery basis. Effective on commercial debts; less so on tiny amounts.
• Use the Money Claim Online service for small claims (typically up to £10,000 in the small claims track). It's straightforward, low cost, and many defendants pay once a claim is filed.
• For repeat slow payers, complain via the Small Business Commissioner — free and effective for late-payment disputes from larger businesses.

If the debt isn't collectable, write it off in your books and remove the client from your customer list. Doing nothing while leaving them as a customer is the worst outcome.

Charging statutory interest

Under the Late Payment of Commercial Debts (Interest) Act 1998, UK B2B suppliers can charge:

• Interest at 8% above the Bank of England base rate (set on 31 December and 30 June), accruing from the day after payment was due.
• A fixed sum for debt-recovery costs: £40 for debts under £1,000, £70 for £1,000–£9,999.99, £100 for £10,000+.
• Reasonable additional costs if recovery costs exceed the fixed sum.

You don't need to have mentioned interest in the contract — the right is statutory. In practice, mentioning the right when you send the formal request is often enough to prompt payment without actually charging.

Legal escalation: realistic expectations

Most disputes settle long before court. Once a Letter Before Action is sent, most commercial clients pay. If you do file at the County Court (via Money Claim Online), filing fees range from £35 to £455 depending on claim value. You can usually recover fees from the defendant if you win.

The bigger question is whether the debtor has assets to pay if you win judgement. A judgement is only as valuable as your ability to enforce it. For most B2B debts against established businesses, this isn't an issue. For consumer or marginal businesses, it can be.