US reader note. This page uses US English but discusses UK tax, VAT, CIS, or payment rules. Treat it as UK-focused educational content, not US legal, tax, or accounting advice. US requirements vary by federal, state, and local rules, so check with a qualified professional before applying anything to a US business.

The problem

Late payment is the single biggest cash flow issue facing UK contractors. Whether you are an electrician, a plumber, a builder, or any other sole trader, the pattern is familiar: you finish the job, send the invoice, and then wait. Sometimes for weeks. Sometimes longer.

The average sole trader is owed thousands of pounds in unpaid invoices at any given time. That money sits in limbo while you still need to pay for materials, fuel, insurance, and everything else that keeps your business running. Late payment is not just inconvenient -- it can threaten the survival of an otherwise healthy business.

The good news is that UK law gives you clear rights when a customer does not pay on time. Knowing those rights, and having a structured process for using them, makes a real difference.

Your right to follow up on payment

Once the due date on your invoice passes, you have every right to follow up. This is not rude. It is not aggressive. It is professional business practice.

Many contractors feel uncomfortable chasing money, especially from residential customers they have a personal relationship with. But consider this: you completed the work as agreed, and the customer agreed to pay by a certain date. Following up is simply holding both sides to the arrangement.

A polite, professional reminder often resolves the issue immediately. Most late payments are not malicious -- they are the result of forgetfulness, a busy inbox, or a customer waiting for their own funds to clear.

Statutory interest on late payments

Under the Late Payment of Commercial Debts (Interest) Act 1998, you have the right to charge interest on invoices that are paid late. The statutory interest rate is 8% per year above the Bank of England base rate.

This right applies automatically to business-to-business (B2B) transactions. If you are invoicing a landlord, a letting agent, a property management company, or another contractor's business, the Act covers you.

For residential customers -- a homeowner who hired you to rewire their kitchen, for instance -- the statutory interest provisions do not apply automatically. To charge interest on late residential invoices, you would need to include an interest clause in your terms of business or contract before starting the work.

How statutory interest is calculated. Take the Bank of England base rate on the date the debt became overdue, add 8%, and apply that annual rate to the outstanding amount. For example, if the base rate is 4.5% and the debt is 1,000 pounds, the annual interest rate would be 12.5%, which works out to roughly 34p per day.

Compensation for debt recovery

In addition to interest, the Late Payment Act also entitles you to claim a fixed sum as compensation for the cost of recovering a late payment. Again, this applies to B2B invoices by default.

The fixed compensation amounts are:

  • 40 pounds for debts up to 999.99 pounds
  • 70 pounds for debts between 1,000 and 9,999.99 pounds
  • 100 pounds for debts of 10,000 pounds or more

You can claim this compensation on top of the original debt and any interest owed. In practice, many contractors do not bother claiming these amounts on smaller invoices, but knowing you have the right can be useful in negotiations -- and for larger debts, it adds up.

Steps to take when a customer does not pay

Having a consistent process removes the guesswork and keeps the situation professional. Here is a timeline that works well for most contractors:

Day 1 to 7 after the due date

Send a polite reminder by email. Keep it short and factual. Reference the invoice number, the amount, and the original due date. Something along the lines of: "I am following up on invoice INV-042 for 650 pounds, which was due on 8 May. Please let me know if there are any issues or when I can expect payment."

Day 14

If there has been no response, send a second reminder. This one can be slightly firmer in tone. Mention that the payment is now two weeks overdue and ask the customer to confirm when it will be settled. If there is a genuine issue -- a dispute about the work, or difficulty paying -- this is usually when it surfaces.

Day 28

Send a formal overdue notice. State clearly that the invoice is significantly overdue, that you expect payment within a set number of days (7 or 14 is reasonable), and that you may need to take further action if it remains unpaid. For B2B invoices, you can mention your right to charge statutory interest.

Day 30 and beyond: letter before action

If you have had no response or no payment after your formal notice, the next step is a letter before action (sometimes called a letter before claim). This is a formal written notice that gives the debtor a final deadline -- usually 14 days -- to pay what they owe before you start court proceedings.

A letter before action should include:

  • The total amount owed, including any interest and compensation
  • A clear deadline for payment
  • A statement that you will issue court proceedings if payment is not received
  • Your contact details for the debtor to respond

The letter before action is a required step before making a court claim. Courts expect both sides to have attempted to resolve the dispute before proceedings start.

Day 45 and beyond: small claims court

For debts under 10,000 pounds, you can make a claim through Money Claims Online, which is the government's online small claims process. The fee depends on the size of the debt and starts from around 35 pounds for smaller claims. You do not need a lawyer for small claims, and the process is designed to be straightforward for individuals and sole traders.

If the debtor does not respond to the court claim within the set deadline, you can apply for a default judgment. If they do respond and dispute the debt, the case may proceed to a hearing.

How WOPA helps

Chasing late payments manually is time-consuming and easy to forget. WOPA automates the early stages of the process so you do not have to remember who is overdue or when the next reminder should go out.

When you send an invoice through WOPA, automatic reminders are scheduled at 7, 14, and 28 days after the due date. The first reminders are polite and professional. For firmer follow-ups, WOPA asks for your approval before sending anything.

You can ask "who hasn't paid?" at any time and WOPA shows you every outstanding invoice. When a customer pays, you tell WOPA and the reminders stop immediately.

WOPA handles the reminders. You handle the relationship. And you never lose track of who owes what.

Join the waitlist to get US beta access when WOPA launches.

Disclaimer. This article is general information only. It is not legal, tax, or debt collection advice. Late payment rules depend on the type of customer, the contract, the invoice, and the jurisdiction. For specific situations, consult a lawyer or contact Citizens Advice.