How to chase late payment from a customer (UK trade): the legal route, with templates

Last summer a customer didn't pay me for 47 days on a £4,200 bathroom job. The materials and the labour I'd already paid for. I texted. I called. I went round. Eventually they paid, but it cost me about £180 in interest on the credit card I'd put the tiles on, and three Sundays of stress for the wife.

Most UK trades have a story like that. The hard bit isn't doing the work. It's getting paid for it.

This guide is the legal route. Three template letters, the Late Payment Act 1998 in plain English, when to charge interest and recovery costs, when to escalate to small claims court, and the one thing most trades get wrong on the first letter that resets the whole clock back to zero.

The legal basics, in plain English

Two different laws cover you depending on who owes you money.

If your customer is a business

The full name is the Late Payment of Commercial Debts (Interest) Act 1998, amended in 2002 and 2013. Applies when one business owes another business money. So if you've done work for a main contractor, a property management company, a commercial premises, a landlord trading as a business, or another trade, you're covered.

What you can claim, on top of the original invoice:

• Statutory interest at Bank of England base rate + 8%. At the time of writing the base rate is around 4.5%, so total interest is roughly 12.5% per annum. Accrues daily from the day after payment was due.
• A fixed recovery cost based on debt size:
• Debt up to £999.99 → £40
• Debt £1,000 to £9,999.99 → £70
• Debt £10,000 or more → £100
• Reasonable additional recovery costs if the fixed sum doesn't cover what you've actually spent chasing the debt (e.g. solicitor's letters, lost work hours).

This is statutory, meaning it applies automatically. You don't need it in your contract. You don't need the customer to agree. They owe it the moment payment is overdue.

If your customer is a homeowner (consumer)

The Late Payment Act 1998 doesn't apply. You're in ordinary contract law territory, governed by the Consumer Rights Act 2015 from the customer's side and the original agreement (your quote, their acceptance) from yours.

You can still charge interest, but only if it's in your terms and conditions and they agreed to those terms before the work started. Most trades don't have this in their T&Cs, which is why most trades can't charge interest on residential jobs.

For consumer late payment, your real lever is small claims court (Money Claim Online). The threat of court action, properly framed, recovers most consumer debts without anyone actually going to court.

Letter 1: The professional nudge (day 1 to 7 overdue)

The biggest mistake trades make on the first letter is making it sound annoyed.

The customer is reading your letter, and the only question in their head is "am I really late, or is this builder being aggressive". You want them to land on the first answer. So the letter is plain. Administrative. Almost boring.

Send it 1 to 7 days after the due date. By email if you've been emailing, by post if it's a more formal job. Recorded delivery if the amount is over £1,000.

What makes this letter work:

• "I hope you're well" at the top sets a calm, non-confrontational tone.
• "I wanted to check there isn't a problem" gives the customer a polite way out. Maybe they genuinely lost the invoice. Maybe their accounting software is down. You're not assuming bad faith.
• "If it's already been paid in the last day or two, apologies for the chase" covers the awkward overlap case and makes you look professional, not desperate.
• The invoice attached again removes the "I didn't get it" excuse.

About 60% to 70% of late-paying customers pay after Letter 1. The ones who don't, you move to Letter 2.

Letter 2: The statutory demand (day 14 to 21 overdue)

This is the letter where you cite the Late Payment Act 1998 (if B2B) or refer to your T&Cs (if consumer), add the interest and recovery costs, and make it clear that the debt is now formally overdue.

Send it 14 to 21 days after the original due date, recorded delivery for anything over £500.

The shift in tone here matters. Letter 1 was administrative. Letter 2 is firm and references the legal position. You're no longer asking, you're stating.

Worked example, the interest calculation

Say the original invoice was £4,200, due 30 March 2026. By 20 April it's still unpaid, so it's 21 days overdue.

• Bank of England base rate (April 2026): 4.5%
• Statutory rate (base + 8%): 12.5%
• Daily interest: £4,200 × 12.5% ÷ 365 = £1.44 per day
• 21 days of interest: £1.44 × 21 = £30.24
• Fixed recovery cost (debt is £1,000 to £9,999): £70
• Total owed: £4,200 + £30.24 + £70 = £4,300.24

That's £100.24 added in 3 weeks. The customer sees the new figure on Letter 2 and realises this is going to keep climbing. Most pay within a week of Letter 2 for exactly this reason.

For consumer customers where the Late Payment Act doesn't apply, swap "Under the Late Payment of Commercial Debts (Interest) Act 1998" with "Under the terms and conditions of our agreement dated [date]" and adjust the interest to whatever your T&Cs specify (typically 8% per annum is reasonable and enforceable). If interest isn't in your T&Cs, drop the interest line and just demand the original debt.

Letter 3: Final notice before action (day 30+ overdue)

If Letter 2 didn't move them, Letter 3 is the bridge to court action. Send it 7 to 14 days after Letter 2.

The CCJ paragraph is the unlock. A County Court Judgment on a customer's credit file makes their next mortgage application harder, their next business loan more expensive, their next car finance more annoying. Most people who've ignored Letters 1 and 2 pay at this point because the CCJ threat is real and proportionate.

If they still don't pay: Money Claim Online

For debts up to £100,000 in England and Wales, you can issue a claim through Money Claim Online (MCOL). It's the small claims route for B2B and consumer debts.

Costs (as of 2026):

• Debt up to £300: £35
• £300 to £500: £50
• £500 to £1,000: £70
• £1,000 to £1,500: £80
• £1,500 to £3,000: £115
• £3,000 to £5,000: £205
• £5,000 to £10,000: £455
• £10,000+: 5% of the claim value

You can claim the court fee back from the debtor as part of your claim.

If the customer doesn't respond within 14 days of receiving the claim, you can request a default judgment. That's when you get the CCJ. Most cases resolve at this stage without any court hearing. About 80% of MCOL claims end in default judgment or settlement.

For Scotland, the equivalent is the Simple Procedure. For Northern Ireland, it's the small claims procedure via the NI Courts and Tribunals Service.

What NOT to do (the 5 common mistakes)

1. Don't text or call instead of writing. Verbal chases leave no paper trail. The court needs to see you gave the debtor formal opportunity to pay before action. Always escalate in writing, even if you started verbally.
2. Don't make Letter 1 angry. The first letter is the customer's chance to save face. If you make it confrontational, you trigger their defensiveness, and now they're looking for reasons not to pay rather than reasons to pay. Stay calm, stay administrative.
3. Don't wait 60 days before chasing. The longer the debt sits, the more the customer assumes you don't really mind. Start the formal chase on day 7 maximum.
4. Don't agree to verbal payment plans without writing them down. If a customer says "I'll pay £500 next Friday and the rest the week after", reply by email confirming the plan in writing, and put a "if no payment is received by [date] the full statutory interest applies" line at the bottom. Otherwise the verbal agreement can be ignored without consequence.
5. Don't threaten action you won't take. If you say "I'll take you to court next Tuesday if you don't pay", actually file the claim on Tuesday. Empty threats train the customer to ignore you.

The full timeline, summarised

For a £4,200 invoice with 30-day payment terms:

• Day 31 (1 day overdue): send Letter 1
• Day 45 (14 days overdue): if no response, send Letter 2 with interest and recovery cost added
• Day 60 (30 days overdue): if still no payment, send Letter 3 (final notice before action)
• Day 70 (40 days overdue): file Money Claim Online if Letter 3 deadline passed
• Day 84-85 (54 days overdue): default judgment likely if customer didn't respond to claim, CCJ issued

The whole process from "this is now overdue" to "court judgment in your favour" is around 12 weeks if you stay on top of it. Most customers fold somewhere between Letter 2 and the Letter 3 deadline.

The one habit that prevents 80% of these situations

Send the invoice the same day the job finishes. Not three days later when you've sat down on the sofa. Not the weekend when you finally do the paperwork. The same day.

Customers pay invoices that arrive in their inbox while the job is still fresh in their mind, the kitchen still smells of paint, the wife is still saying how good it looks. Send it three days later and the goodwill has cooled. Send it a week later and they're already thinking about something else.

The TradeStash app does this in 30 seconds from the van. Tap, send, paid. Same-day invoicing is the single biggest move on cashflow you can make. Bigger than chase letters, bigger than charging interest, bigger than the small claims threat.