Start before the invoice is late
Most late payment is preventable at the point of sale. Agree payment terms in writing before the work starts, put the due date and payment details clearly on every invoice, and send it to the person who actually approves payment, not only the person you work with day to day.
Ask new clients for a purchase order number or approval route if they need one. A missing PO is a common reason an invoice sits unpaid.
A sequence that works
- A few days before the due date: a short, friendly note confirming the invoice is on its way for payment. It costs nothing and catches problems early.
- The day after the due date: a polite reminder with the invoice attached and the payment details again.
- A week later: a phone call, not another email. Ask whether there is a query and when you can expect payment, and write down what they say.
- Two to three weeks late: a firmer written notice that refers to your agreed terms, states the amount and sets a date for payment.
- After that: a formal letter that mentions your right to charge interest and compensation, described below.
Stay courteous at every step. The aim is to be paid and keep the client, and most late payers are disorganised rather than unwilling.
Chase in the right order
Start with the invoices that matter most to your cash, which usually means the largest and the oldest. A single large invoice that is a week late can matter more than five small ones that are a month late. A forecast that shows when cash gets tight tells you which invoices are urgent, not just which are overdue.
What the law allows in the UK
If another business pays you late, the Late Payment of Commercial Debts (Interest) Act 1998 lets you claim statutory interest and fixed compensation, unless your contract sets its own reasonable terms for late payment.
- Statutory interest is 8% plus the Bank of England base rate, on an annual basis, for business-to-business transactions.
- Fixed compensation for debt recovery costs is £40 for debts up to £999.99, £70 for debts from £1,000 to £9,999.99, and £100 for debts of £10,000 or more, per invoice.
Check the current detail on the government's page before you rely on it, and take advice for anything significant. Many businesses never claim interest, but stating your right to it in a formal reminder often prompts payment. The late payment interest calculator works out the amount.
Making it routine
Chasing works when it is regular and dull. Set a weekly slot, go through every overdue invoice, and log what was said. Cadence ranks overdue invoices by amount and age, shows which clients tend to pay late, and on Enterprise drafts the reminder email for you to review and send. See how it works.
This guide is general information, not legal advice.