How to chase late payments as a self-employed tradesperson

The scale of the problem

Late payment is endemic in the UK trades industry. Research from the Federation of Small Businesses consistently shows that small businesses — including sole-trader tradespeople — are owed billions in overdue payments at any given time. For a one-person business, a single unpaid £1,500 invoice can mean a missed mortgage payment.

The good news: UK law is firmly on your side if you invoice correctly and chase systematically.

UK late payment law — what you need to know

The Late Payment of Commercial Debts (Interest) Act 1998 gives businesses the right to charge statutory interest on overdue invoices. The key points for sole traders:

• If you haven't agreed payment terms in writing, payment is due within 30 days of the invoice or delivery of goods/services (whichever is later)
• After the due date, you can charge 8% above the Bank of England base rate as statutory interest
• You can also claim a fixed debt recovery charge: £40 for debts under £1,000, £70 for debts of £1,000–£9,999

Note: this law applies to business-to-business debts. For residential customers, you rely on your contract terms and small claims court if necessary.

Step-by-step escalation process

Step 1: Friendly reminder (1–3 days after due date)

Most late payments are simply oversight. A brief, friendly text or email is appropriate: "Hi [Name], just a quick reminder that invoice [INV-047] for £[amount] was due on [date]. Let me know if you need the details again. Thanks, [Your name]."

Step 2: Formal reminder (7 days after due date)

Send an email (creating a paper trail) with the invoice attached: "Dear [Name], this is a formal reminder that invoice [INV-047] for £[amount] remains unpaid. Payment was due on [date]. Please arrange payment within 7 days to avoid further action. Statutory interest may be applied to overdue amounts under the Late Payment of Commercial Debts Act 1998."

Step 3: Letter before action (21 days overdue)

This is a formal letter stating that you intend to pursue the debt through the courts if not paid within 7 days. The mention of legal action resolves the majority of cases.

Step 4: Small claims court

For debts under £10,000, the small claims track at the County Court is designed to be accessible without a solicitor. You file online at gov.uk/make-court-claim-for-money. Court fees are recoverable from the debtor if you win.

Prevention is better than cure

• Always send a written quote and get written acceptance before starting work
• Take a 30–50% deposit upfront for larger jobs
• Send your invoice the day you complete the job, not a week later
• State clear payment terms on every invoice
• Consider credit checking commercial customers before taking on large projects