How UK trade businesses invoice promptly, set payment terms and chase late payment to get paid faster

This guide shows a UK trade business how to invoice promptly, set payment terms customers agree to, and chase late payment calmly so money arrives sooner. It is for owner-run firms where the person on the tools often does the invoicing at night, from heating engineers and electricians to roofers and small builders. You get an invoice checklist, payment terms for homeowners, landlords and contractors, the business late payment rules worked through with real numbers, a chasing timetable with a link to reminder messages you can copy, and what to do when reminders stop working.

Legal and tax points are summarised from the official sources listed at the end, checked in October 2026. They are not legal, tax or debt-recovery advice.

Send the invoice the day the job is signed off, because the payment clock starts when the customer gets it

An invoice sitting in your drafts for a week is a week's free credit. GOV.UK says that unless you agree a payment date, the customer must pay within 30 days of getting your invoice or the goods or service. For business customers, the Late Payment of Commercial Debts (Interest) Act 1998 starts that default 30-day period from the later of the day you did the work and the day the customer was told the amount owed. Either way, a late invoice means a later payment, so make it a rule that a finished job is invoiced the same day or the next working morning.

Agree what "ready to invoice" means so finished jobs do not wait for paperwork

Invoices usually go out late because something is missing: a variation price, a materials list, an order number or a photo the agent wants. Agree a short check before invoicing: quote version, work done, approved extras, materials, certificate status and who pays. The jobs guide covers how to record those details on site so the office can bill without ringing you.

Take payment before you leave on small reactive jobs

Illustrative example: a heating engineer gets a 7am call about a combi boiler showing a fault code, attends at 9am and replaces a failed diverter valve. The price was agreed on the phone, and the booking message said "Payment is due when the work is finished, by card or bank transfer." The engineer sends the invoice from the van and takes payment on the doorstep. There is nothing to chase because nothing is outstanding.

Put the details on every invoice that stop it being queried or sent back

An invoice the customer can't match to the job, or one missing a detail the law or their accounts team needs, tends to come back instead of getting paid. Every invoice needs a unique number, your details and the customer's, a description of the work and when you did it, the amounts, any VAT and the total owed. VAT-registered firms and CIS subcontractors add a few more lines.

Our invoice template for trades gives you a layout to print or copy, the extra lines for VAT invoices, the domestic reverse charge and CIS deductions, and a worked example for a subcontract job.

Set payment terms before the work starts, and make the quote and the invoice say the same thing

GOV.UK says you can set your own payment terms, such as discounts for early payment and payment upfront. The word that matters is "set": terms are agreed when the customer accepts your quote or signs your terms, not invented later. Printing "payment due in 7 days" on an invoice after agreeing nothing, or agreeing 30 days, does not reliably shorten the time the customer has. Put the terms in the quote, repeat them at booking and print the same terms on the invoice. The table gives our suggested starting points, not legal requirements.

Homeowners are told to pay in stages and avoid big deposits, so price your terms to match

Citizens Advice tells homeowners to pay by card rather than cash, to pay in stages, and not to pay everything up front. If a deposit cannot be avoided on a long job, it tells them not to agree to more than 25% and to get a receipt. It also suggests that where a deposit is for materials, the customer might offer to buy the materials themselves.

A customer who has read that will query a 50% deposit on a bathroom refit. Terms that line up with it are easier to agree: a deposit tied to specific materials you are ordering for their job, then payments at stages both of you can see, such as first fix complete, tiling complete and final handover.

You cannot charge homeowners extra for paying by card

Since 13 January 2018, UK rules have banned surcharges for paying with consumer debit and credit cards and payment systems such as PayPal. Under the Consumer Rights (Payment Surcharges) Regulations 2012, a business must not charge a fee for payment by a consumer card. For business customers paying with a commercial card, any fee must not exceed what the payment costs you. Build card costs into your prices instead of adding them at the end.

A late payment charge in a homeowner contract has to be fair and written plainly

The business-to-business late payment rules below do not apply to a householder. If you want to charge homeowners interest on late payment, it has to be a term they agreed to. The Consumer Rights Act 2015 says an unfair term in a consumer contract does not bind the consumer, and written terms must be transparent: plain, intelligible and legible. Its list of terms that may be unfair includes a term requiring a consumer who fails to meet their obligations to pay a disproportionately high sum in compensation. A modest, clearly stated interest rate on overdue amounts is easier to defend than a £50 "admin fee" per reminder. Even without such a term, GOV.UK says that in a court claim, interest on debts other than late commercial payments is usually 8% a year.

Charge interest and a fixed fee when a business customer pays late

When the customer is another business, such as a landlord letting property, a letting agent, a shop or a main contractor, the Late Payment of Commercial Debts (Interest) Act 1998 applies to contracts where both of you are acting in the course of a business. It gives you three things, according to GOV.UK.

• A default payment date. If you did not agree one, payment is late 30 days after the customer gets the invoice or you do the work, whichever is later. If you agree a date, it must usually be within 60 days for business customers (30 days for public authorities). A longer period is allowed only if it is fair to both businesses.
• Statutory interest. 8% a year plus the Bank of England base rate, unless your contract sets a different rate. The base rate used is the one in force on 30 June (for interest that starts running between 1 July and 31 December) or on 31 December (for interest starting between 1 January and 30 June).
• A fixed sum for recovery costs. £40 for a debt up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more, charged once for each late payment. If your reasonable recovery costs are higher, you can also claim the difference.

You can choose not to charge interest; many small firms only mention it when a customer stops responding. GOV.UK says to send a new invoice if you decide to add it.

Illustrative example: a letting agent on 30-day terms who pays three weeks late

A plumbing firm replaces a leaking cylinder in a rented flat for a landlord, through the landlord's letting agent, on agreed 30-day terms. The invoice total is £1,450. Payment falls due in early September 2026 and is still unpaid 21 days later.

• The Bank of England base rate on 30 June 2026 was 3.75%, so statutory interest is 11.75% a year.
• Yearly interest: £1,450 × 0.1175 = £170.38. Daily interest: £170.38 ÷ 365 = about 47p.
• After 21 days late: about £9.80 interest.
• Fixed sum for a debt between £1,000 and £9,999.99: £70.

The firm can ask for about £1,529.80. Often a polite note saying it is entitled to statutory interest and compensation if the invoice stays unpaid is enough to move it up the agent's payment run. Check the rate before you calculate; the Small Business Commissioner's website has an interest calculator.

Subcontracting for a builder: payment notices, pay less notices and your right to suspend work

If you work for a builder or main contractor, Part II of the Housing Grants, Construction and Regeneration Act 1996 (often called the Construction Act) adds rules on top of the Late Payment Act. These sections apply in England, Wales and Scotland; Northern Ireland has its own Construction Contracts (Northern Ireland) Order 1997. Key points from the legislation:

• It does not apply to a contract with a residential occupier, meaning work mainly on a house or flat the customer lives in or intends to live in.
• You are entitled to stage or periodic payments unless the work is specified or agreed to last less than 45 days.
• The contract must require a payment notice, showing the sum considered due and how it was calculated, no later than five days after each payment due date.
• To pay less than the notified sum, the payer must give a pay less notice saying what they will pay and why. If the contract sets no deadlines, the Scheme for Construction Contracts (England and Wales) requires it seven days before the final date for payment, which defaults to 17 days after payment became due.
• If the notified sum is not paid by the final date, you can suspend some or all of your work after giving at least seven days' written notice stating why. The payer must then cover your reasonable costs of the suspension, and the time lost is added to your deadline.

Suspending work is a serious step; take advice on your subcontract before relying on it.

New late payment law is going through Parliament but has not changed the rules yet

The Commercial Payments Bill was introduced to Parliament in May 2026. GOV.UK says it would cap payment terms at 60 days with strictly limited exemptions, make late payment interest at 8% above base rate mandatory, ban retentions under construction contracts, and give the Small Business Commissioner powers to adjudicate payment disputes and fine persistent late payers. When we checked on 12 October 2026, Parliament's bill page showed it was still going through the House of Lords, after report stage, so details may change. GOV.UK says there will be a lead-in time and the measures will not apply retrospectively, so the 1998 Act rules above still apply.

Chase late payment on a fixed timetable so no overdue invoice is forgotten

Most late invoices are not refusals: the email went to an old address, the agent is waiting for landlord approval, or the customer forgot. Chase every overdue invoice on the same timetable: a friendly reminder the day after it's due, a call about a week later, a firmer written reminder at fourteen days and a final one at thirty. Our payment reminder messages for trade invoices give you the wording for each step, from the day after the due date to the final reminder, and what not to say.

Handle disputes and part payments so one query does not hold up the whole invoice

A customer who says "I'm not paying until you sort the tap" is raising a query, not refusing to pay. Log it the same day (invoice, item, amount affected, who is dealing with it) and compare the complaint with the quote, job sheet and photos.

If the work is at fault, the customer has legal rights. The Consumer Rights Act 2015 says a service must be performed with reasonable care and skill, and where it is not, a consumer can require you to put it right or, in some cases, have the price reduced. Fixing a real problem quickly is usually the fastest route to being paid.

Where only part of the bill is in question, ask the customer to pay the rest now. Illustrative example: a roofer invoices £3,200 for re-felting a flat garage roof and repointing a chimney. The customer is happy with the roof but says the pointing has a crack. The roofer replies: "Thanks for letting me know. I will look at the pointing on Thursday. It was £480 of the invoice, so could you pay the £2,720 for the roof now and the £480 once you are happy with the chimney?"

Agree payment plans in writing and check each payment arrives

If a customer cannot pay in one go, a written plan is usually better than a court claim. Write down the amounts, dates and what happens if a payment is missed, get the customer to confirm by reply, and check each instalment on its date.

When reminders fail: send a letter of claim, then use the small claims process or the Small Business Commissioner

The formal steps below are slower and cost money, so weigh the amount owed against your time and the fees.

Debts from homeowners and sole traders: follow the Pre-Action Protocol for Debt Claims

In England and Wales, the Pre-Action Protocol for Debt Claims applies when a business, including a sole trader, claims a debt from an individual, including a sole trader. Before going to court, send a letter of claim with the protocol's enclosures, and give the customer 30 days from the date on the letter to reply. Business customers get a shorter letter under the court's general pre-action rules, usually with 14 days to reply. Our letter before action template for trades gives you the letter of claim to copy, what to enclose, and a separate version for business customers.

Make a court claim online if the letter of claim is ignored, and check the fee first

In England and Wales you can make a county court claim online or by post. GOV.UK sets out the court fee by claim amount, including interest. For example:

You may be able to claim the fees back if you win, and there may be further fees later, for example for a hearing or to enforce a judgment. GOV.UK says that if your claim is £10,000 or less and the defendant disputes it, you will be told you must attend mediation, which the court organises free by phone. You cannot make a claim if you are told the person is protected by the Breathing Space scheme.

GOV.UK also explains statutory demands, which give the debtor 21 days to pay or reach an agreement. If they do not, you can apply to bankrupt the individual or wind up the company. The Insolvency Act 1986 sets the minimum debt at £5,000 for bankruptcy and £750 for winding up. GOV.UK notes there may be faster ways to get smaller debts paid; take advice before using one.

A larger business customer will not pay: contact the Small Business Commissioner

The Office of the Small Business Commissioner says that if you run a small business in the UK and have an unresolved payment dispute with a larger customer, it may be able to help. Its service is free and confidential, and its website has a late payment interest calculator.

Stop invoice fraud by telling customers how your bank details will never change

The National Cyber Security Centre describes business payment fraud as emails that impersonate someone you deal with, sometimes with a real-looking invoice, asking for money to be paid into a different account. If your customer pays the fraudster, you are still unpaid and the customer is out of pocket.

• Put your bank details on the quote as well as the invoice, so the customer has seen them before any payment request.
• Add a line to every invoice: "We will never change our bank details by email or text. If you get a message saying we have, call us on the number on our quote before paying."
• Protect the email account you invoice from with a strong password and two-step verification.

If you think money has gone to a fraudster, the NCSC says to contact your bank directly using its official website or phone number, and to report the incident.

Keep a weekly list of who owes you what so you see a cash gap before it hits

A full diary is not money in the bank. A weekly 15-minute look at who owes you and what you have to pay out shows a problem while there is still time to act. Keep a simple aged debt list in your accounting software or on a sheet.

Alongside it, list what you must pay out in the next four weeks: merchant accounts, van finance, wages, and any VAT or tax payments your accountant has told you about. If money in arrives later than money out, you will see it on the sheet before you feel it in the bank.

Invoicing software can send reminders on a timetable, but test it first with a part payment and an invoice under query: an automatic "final demand" to a customer whose complaint you are handling does more harm than good. The guide to choosing job management software covers what to check before you buy.

Guides in this section

Shorter guides that go deeper on getting paid.

Invoice template for trades: what every invoice must show, plus the VAT and CIS lines

An invoice to print or copy, with the VAT, reverse charge and CIS lines ready to fill in.

Letter before action template for trades: the last letter before a court claim

Two letters to copy, one for homeowners and sole traders and one for business customers, what to enclose, the deadlines each must give, how to handle replies, the mistakes to avoid and a filled-in example.

Payment reminder messages: what to send when a trade invoice goes overdue

Three reminders to copy for text and email, a timetable from the due date to the final notice, interest and compensation for business customers, and what the law says you must not say when chasing.

Use the free software checklist, then read the software guide

Free tool

Trade business software checklist: know what you need before you book a demo

Check any invoicing or job app handles reminders, part payments and queried invoices the way this guide sets out.

Get the checklist

Read next

Choose job management software for your trade business without overpaying or getting locked in

How to choose job management and invoicing software that fits the way your business runs, and what to test before you pay.

Read the guide

Sources checked for this guide

Invoicing, late payment and debt recovery points checked against official guidance. The chasing timetable, message wording, payment terms table and debt list layout are our suggestions, not legal requirements. Illustrative examples are hypothetical.

• GOV.UK: Invoicing and taking payment from customers
• GOV.UK: Late commercial payments, charging interest and debt recovery
• legislation.gov.uk: Late Payment of Commercial Debts (Interest) Act 1998
• legislation.gov.uk: Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002
• Bank of England: Official Bank Rate history
• GOV.UK: Commercial Payments Bill overview
• Office of the Small Business Commissioner: Late Payments Bill
• Office of the Small Business Commissioner: Make an enquiry
• legislation.gov.uk: Housing Grants, Construction and Regeneration Act 1996, Part II
• legislation.gov.uk: Scheme for Construction Contracts (England and Wales) Regulations 1998, Schedule Part II
• legislation.gov.uk: Construction Contracts (Northern Ireland) Order 1997
• GOV.UK: What you must do as a CIS subcontractor
• HMRC: VAT domestic reverse charge for building and construction services
• HMRC: Record keeping for VAT (Notice 700/21)
• HMRC: VAT guide (Notice 700)
• Citizens Advice: Before you get work done on your home
• legislation.gov.uk: Consumer Rights (Payment Surcharges) Regulations 2012, regulation 6A
• GOV.UK: Card surcharge ban
• legislation.gov.uk: Consumer Rights Act 2015 (sections 49, 54, 62, 68 and Schedule 2)
• Ministry of Justice: Pre-Action Protocol for Debt Claims
• GOV.UK: Make a court claim for money
• GOV.UK: Make and serve a statutory demand
• National Cyber Security Centre: Business payment fraud
• UK Parliament: Commercial Payments Bill [HL]
• legislation.gov.uk: Insolvency Act 1986, section 267
• legislation.gov.uk: Insolvency Act 1986, section 123
• GOV.UK: Make CIS deductions and pay subcontractors