Late Payment as a Plumber: What You Can Do

UK law gives businesses significant rights when commercial invoices go unpaid. Understanding these rights is the first step to enforcing them.

The Late Payment of Commercial Debts (Interest) Act 1998 applies to all business-to-business transactions. Key provisions:

• Once a commercial invoice is more than 30 days overdue (or past the agreed payment terms), you can charge statutory interest at 8% above the Bank of England base rate
• You're also entitled to a fixed compensation charge: £40 for debts under £1,000; £70 for £1,000–£10,000; £100 for debts over £10,000
• You can claim reasonable debt recovery costs if you use a debt collection agency or solicitor

Note: these rights apply to B2B transactions. Different rules apply to domestic (consumer) debts, but your invoice terms can still specify late payment charges for domestic customers — they just need to be a genuine pre-estimate of your loss, not punitive.

The mere mention of statutory interest in a politely worded letter before action resolves a surprising number of late commercial invoices.

A structured escalation process handles late payment consistently without damaging customer relationships unnecessarily:

Step 1: Automated reminders (days 1–7 overdue)

Use your invoicing or job management software to send automatic reminder emails at day 1, day 3, and day 7 overdue. Keep them polite: "Just a reminder that invoice [number] for £[amount] was due on [date] — please let us know if you have any questions." These catch the genuine oversights without any drama.

Step 2: Personal contact (days 7–14 overdue)

Call the customer directly. A phone call is more effective than more emails at this stage. Stay professional: "I'm following up on invoice [number] — can you give me a payment date?" Get a specific date, not "I'll sort it this week."

Step 3: Formal letter before action (days 21–30 overdue)

A written letter (not just email) stating that if payment is not received by a specific date, you will pursue the matter through the courts. Include the overdue amount, invoice number, and reference to your right to claim statutory interest. This is a formal legal step that changes the tone significantly.

Step 4: Small Claims Court (30+ days overdue)

For debts under £10,000, file a claim online at Gov.uk (Money Claim Online). The filing fee is £25–£455 depending on the amount. The majority of claims are settled before the court date — the process of filing is often enough to prompt payment. The cost is recoverable as part of your claim if you win.

Step 5: Debt collection agency (alternative to court)

Commercial debt collection agencies work on commission (typically 10–25% of the recovered debt). They take over the chase process and use their own legal escalation powers. Consider this for debts where the relationship is already damaged and you just want the money.

The best approach to late payment is preventing it in the first place. The most effective prevention measures:

Credit check new commercial customers — Before taking on a significant commercial job (£2,000+) with a new client, do a basic company credit check. Companies House shows recent filings; a credit reference agency (CreditSafe, Experian Business) shows payment history. Businesses that consistently pay late are visible in the data.

Require deposits — A 25–40% deposit before starting any significant job makes non-payment less financially devastating and signals customer commitment. A customer who refuses to pay a deposit is a customer you should think twice about.

Send invoices immediately — An invoice sent the same day the job is done gets paid faster than one sent days or weeks later. Same-day invoicing is the single most impactful process change for reducing payment delays.

Make payment easy — Include a payment link (Stripe, GoCardless, SumUp) in every invoice email. The more frictionless paying is, the quicker customers pay. Card-on-site readers also speed up domestic payment significantly.

State payment terms on every quote and invoice — "Payment due within 7 days of invoice date" must be written on the invoice. Verbal terms don't hold up if disputed.

Sometimes late payment isn't avoidance — it's dispute. The customer is withholding payment because they're unhappy with the work. This is a different situation requiring a different approach.

If a customer disputes your invoice:

• Listen first — Understand their concern before responding. Is it a genuine defect, a misunderstanding about scope, or a pricing dispute?
• Document everything — Check what was agreed in the quote, gather any photos from the job, and note the dates of all communication.
• Offer to inspect and rectify genuine defects — If the work is defective, fix it. Your reputation is worth more than the argument. A customer who had a problem rectified promptly often becomes your best advocate.
• Reject unreasonable claims firmly and in writing — If the dispute is unfounded (extra work outside original scope, unrealistic expectations not in the quote), respond in writing explaining why the claim is not valid and restate your payment demand.
• Mediation — For larger disputed amounts (£5,000+), formal mediation through a trade body or commercial mediator is often cheaper and faster than court.