Cash flow kills more trade businesses than bad workmanship does. You can be busy, well priced and technically excellent, and still go under because £14,000 is sitting in other people’s accounts.
Most of getting paid on time happens before you pick up a tool.
Set it up before you start
Put the terms in writing, with a number of days on them
“On completion” is not a payment term. It has no due date, so it can never be late, so you have nothing to chase against.
Write something specific into your estimate and repeat it on the invoice:
Payment due within 14 days of the invoice date. Deposit of 30% payable on acceptance.
If nothing is agreed on a business-to-business job, the Late Payment of Commercial Debts (Interest) Act 1998 supplies a default of 30 days, running from the later of performance and the customer receiving the invoice. That is a fallback, not a plan.
Be wary of agreeing long terms just to win work. Under the same Act, contractual terms that are grossly unfair to the supplier can be challenged, and terms beyond 60 days on a business debt need justification.
Take a deposit
There is no legal cap. There is a good rule of thumb: never fund a stranger’s materials.
If the job needs £2,000 of boiler and pipework, that £2,000 should not be leaving your bank on the strength of a handshake. Ask for materials up front, or a percentage on larger works, and say plainly what it is for. Customers accept “the deposit covers ordering your materials” far more readily than an unexplained third.
Keep it proportionate. A deposit designed to punish a customer who cancels may be unenforceable, as covered in how binding is an estimate.
Stage the payments on anything long
The rule: stay ahead of your own exposure. At no point in a job should the customer owe you more than you can afford to lose.
On a four-week job, something like:
- 30% on acceptance, against materials
- 30% at first fix or an agreed midpoint
- 30% at second fix
- 10% on completion
Tie each stage to a visible event, not a date. “On completion of first fix” is checkable. “At two weeks” invites an argument about whether you were behind.
A retention of 5 or 10 per cent held until snagging is finished is normal on larger work, and it is far easier to accept when it is a tenth than when it is everything.
Know who is paying
Check before you start. Is it the couple, or the husband’s company? The tenant, or the landlord? The main contractor, or the developer above them?
Invoice the wrong entity and you may have no enforceable debt against anybody. On commercial work, check the customer at Companies House and look at whether the accounts are filed and up to date. It takes two minutes.
Invoice the day you finish
Not the end of the week. Not when you get round to it.
Every day between finishing and invoicing is a day added to the front of your payment terms, and it is very hard to be firm about a 14-day term on an invoice you sent three weeks late. Send it while you are still in their driveway if you can, because goodwill is at its highest the moment the job is done and the customer is pleased.
What the invoice needs
- a unique sequential number
- your business name, address and contact details, and your legal details if you are a limited company
- your VAT number if you are registered, with the VAT shown correctly for the customer type (see VAT on estimates and quotes)
- the customer’s name and address
- the invoice date and the due date as an actual date, not “14 days”
- a clear description of the work, matching your estimate and any agreed variations
- the amount, less any deposit already paid, with the balance shown plainly
- bank details on the invoice itself, not in a separate message
Put “Payment due by 21 September 2026” rather than “14 days”, because a date is harder to be vague about. And note that surcharging consumers for paying by card is prohibited under the Payment Services Regulations 2017, so build card costs into your prices instead.
The chase, in order
Escalate steadily. Each step is firmer than the last, and none of them are angry.
The day after the due date. A short, friendly email or text. Assume it is an oversight, because usually it is. Reattach the invoice.
Day seven. Phone call, not email. A call gets you the actual reason: they are waiting to be paid themselves, the invoice went to the wrong person, or there is a complaint nobody has mentioned. You cannot solve any of those by email.
Day fourteen. Written and formal. State the invoice number, the amount, the due date, the number of days overdue, and what happens next with a date on it. For a business debt, say that you reserve the right to claim statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998.
Day thirty. Letter before claim. A properly written one recovers a lot of debts on its own, because it is the point at which the customer realises you are serious.
Throughout: stay polite, stay factual, and keep every message. You may end up showing all of it to a judge, and the calm creditor is more persuasive than the furious one.
Interest and compensation
Business customers. The Late Payment of Commercial Debts (Interest) Act 1998 gives a statutory right to interest at 8 per cent above the Bank of England base rate, plus a fixed compensation sum that steps up in bands with the size of the debt, plus reasonable recovery costs above that sum. The right exists even if your contract says nothing. The base rate used is the rate in force at fixed reference dates rather than the day you invoice, so check the mechanism and the current bands on GOV.UK.
Consumers. That Act does not apply. You need a contractual interest clause agreed before the work, and it must be fair and transparent under the Consumer Rights Act 2015. Failing that, a court has discretion to award simple interest on a judgment debt under section 69 of the County Courts Act 1984, commonly at 8 per cent.
Whether to actually charge interest on a domestic job is a judgement call. Often the more useful move is to mention the right once, in the day-fourteen letter.
Small claims
For most trade debts this is the small claims track, and it is designed to be used without a solicitor.
Before you file, send a proper letter before claim. Where a business claims against an individual, including a sole trader, the Pre-Action Protocol for Debt Claims applies. It requires a letter of claim with an information sheet, a reply form and a financial statement form, and normally gives the debtor 30 days to respond. Skipping it risks your claim being stayed or costs going against you even when you are right.
Where to file. In England and Wales, Money Claim Online handles money claims up to £100,000, and claims up to £10,000 are usually allocated to the small claims track. Scotland uses simple procedure for claims up to £5,000, and Northern Ireland has its own process. Limits and fees change, so check the current position for your nation before starting.
Fees. Court fees are on a sliding scale by claim value and are added to the claim, so you normally recover them if you win. Legal costs are generally not recoverable on the small claims track.
Be realistic about the end of it. Winning a judgment is not the same as receiving money. Enforcement is a further step with its own cost, and a debtor with nothing produces a judgment worth nothing. That is an argument for deposits and staged payments, not against using the court.
Commercial and subcontract work has its own rules
If you work as a subcontractor on construction projects, the Housing Grants, Construction and Regeneration Act 1996, as amended in 2009 and usually just called the Construction Act, gives you rights that domestic work does not.
In outline: construction contracts must provide a payment mechanism with payment notices and a deadline for a pay less notice if the payer intends to pay less than the notified sum. Miss that notice and the notified sum generally becomes payable. There is a right to suspend performance for non-payment on proper notice, and a right to refer a dispute to adjudication at any time, which produces a binding decision in weeks rather than months.
Contracts with a residential occupier are excluded, so none of this helps on a domestic bathroom. On main contractor work it is the strongest tool you have, and it is worth advice on the notice regime before you need it rather than after.
Reducing the problem before it starts
- Quote clearly, so there is nothing to argue about at the end. That is what to include in an estimate.
- Confirm every variation in writing, with a price, before doing it.
- Send progress photographs. A customer who has watched the work go well pays faster.
- Walk the job with the customer and get the snagging list before you invoice, not after.
- Make paying easy: bank details on the invoice, a payment link if you use one.
- Watch for the tells. A customer who was slow on the deposit will be slow on the balance.
What not to do
- Do not down tools without a proper right to do so. On domestic work, walking off can put you in breach and hand the customer a counterclaim.
- Do not remove installed materials. Even with a retention of title clause, taking back a fitted boiler is a route to a very bad afternoon.
- Do not vent in writing. Every message is potentially evidence.
- Do not let it drift. Debts get harder to recover the older they are, and there is a limitation period on bringing a claim at all.
This is general information rather than legal advice. Citizens Advice, your trade body and, above a certain sum, a solicitor are all worth the call.
The invoice itself is the easy part, and it should follow automatically from what you already agreed. If your estimate carried a scope, agreed variations and stated payment terms, the invoice writes itself, which is exactly the chain TradeScribe is built around: the notes become the estimate, and the estimate is what you get paid on.