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Free guide · Reviewed July 2026

Getting Paid On Time

Late and unpaid invoices kill more small trade businesses than bad workmanship ever has — and most of it is preventable before the tools come out. Here's how to structure payments, what the law gives you, and how to chase what you're owed, calmly and in order, right through to small claims.

Part 1Why trades don't get paid (and the fix)

Most payment problems aren't bad luck. They're designed in at the start, when nothing was agreed in writing. No deposit, no payment dates, no clear "what done looks like", and suddenly you're two months past completion still chasing a balance while the customer goes quiet.

The fix is almost boringly simple: agree how and when you'll be paid, in writing, before the tools come out. A signed quote that spells out the deposit, the stage payments, the dates and the terms shuts down most arguments before they can start, because the answer is already on paper, with the customer's name under it.

The golden ruleNever let the amount of unpaid work get bigger than you can afford to lose. Structure the payments so you're always roughly square with the customer as the job goes on — not carrying the whole job to the end.

Part 2Take a deposit, stage the rest

Deposit. For any job with real materials cost, take a deposit up front. It covers what you have to buy before you start, so you're not lending the customer the money for their own job. It also filters out time-wasters: someone unwilling to pay a fair deposit is a warning sign.

Staged (interim) payments. On bigger jobs, break the price into stages tied to clear milestones. For example: deposit on acceptance, a payment at first fix, another at second fix, and the balance on completion. Keep each stage small enough that if it all went wrong tomorrow, you're not badly out of pocket.

Final payment. Make it clear what counts as "complete" and when the final balance is due, for example "within 7 days of practical completion". Vague endings are where final payments get stuck.

Tie money to milestones, not dates alone"£X when the first fix is signed off" is harder to argue with than "£X on the 14th", because it's tied to visible progress everyone can agree on.
Quoting at the kitchen table? Know the cooling-off ruleContracts agreed in the customer's home (most domestic trade work) carry a 14-day cooling-off right under the Consumer Contracts Regulations 2013. You must give written notice of that right. Skip it and the cooling-off period can stretch up to 12 months, and you can struggle to charge for work done in it. If the customer wants you to start inside the 14 days, get their request to begin early in writing (a signed note or an email). Search GOV.UK for "consumer contracts regulations" for the detail.

Read the detail: Should I take a deposit? — how much, how to ask, and the cooling-off trap.

Part 3The law on your side: the Construction Act

The Housing Grants, Construction and Regeneration Act 1996 (updated in 2011), usually just called "the Construction Act", gives construction businesses real payment protection. For contracts it covers, it provides:

  • A right to staged payments on jobs lasting more than 45 days, rather than waiting until the very end.
  • Payment notices and the "notified sum": a clear process for setting out what's due.
  • The pay-less notice. A payer who wants to pay you less than the notified sum must serve proper notice in time; if they don't, the notified sum becomes due in full.
  • The right to suspend work for non-payment (after giving the required notice).
  • The right to adjudication: a fast dispute process (typically a decision in around 28 days) instead of a long court case.
  • A ban on "pay-when-paid" clauses: a contractor generally can't refuse to pay you just because they haven't been paid up the chain.
The big exception: read thisThe Act does not apply to a contract with a "residential occupier", i.e. someone having work done on the home they live in (or will live in). So for most domestic homeowner jobs these statutory rights don't apply, and you rely on your own written contract terms instead. That's exactly why good terms matter. The Act does cover most business-to-business and subcontract construction work.

Part 4Late payment: the interest you can claim

For business-to-business debts, the Late Payment of Commercial Debts (Interest) Act 1998 lets you charge a late payer, and these rights apply automatically, with no clause needed in your terms:

  • Statutory interest of 8% plus the Bank of England base rate, running from when payment was late.
  • Fixed compensation for each late invoice, on top of the interest:
Size of the debtFixed compensation
Up to £999.99£40
£1,000 to £9,999.99£70
£10,000 or more£100

You can also claim reasonable costs of recovering the debt above that fixed sum. These rights apply to commercial debts automatically, but stating them clearly in your terms tends to make customers pay on time in the first place.

Domestic customers are differentThe Late Payment Act applies to business customers, not consumers. For domestic jobs, put a clear interest clause in your terms (the rate and when it starts) agreed before the work; that's by far the strongest position. Without a clause you can still ask the court to add interest (usually 8%) if you end up claiming, but a clause agreed up front beats arguing about it later.

Read the detail: Late payment interest — the daily sum, the compensation bands, and when to actually charge it.

Part 5Retention, and getting it back

On many commercial and subcontract jobs the customer holds back a small percentage of each payment, often around 2.5%–5%, as "retention", released after a defects period to make sure any snags get put right. It's normal, but retention is also one of the most commonly forgotten sums in the trade.

  • Agree the retention percentage and exactly when it's released before you start.
  • Put the release dates in your diary: half on practical completion, the balance at the end of the defects period is common.
  • Actually claim it when it's due. Money you don't ask for is money you won't get.

Part 6Payment terms that actually work

Good payment terms are short, clear and agreed up front. On every quote, make sure these are spelled out:

  • Who the contract is with: the correct name of the person or company paying.
  • The deposit: how much, and that work starts once it's received.
  • The stage payments: the amount and the milestone that triggers each.
  • Payment window (e.g. "due within 7 days of invoice") and accepted payment methods.
  • What counts as complete: so the final payment can't be held up by a moving goalpost.
  • Late payment: your interest terms (and, for business customers, that statutory interest and compensation will apply).
  • Retention, if any: the percentage and the release dates.
Get it signedTerms only protect you if the customer has agreed to them before the work. A signed or accepted quote that contains them is far stronger than terms produced for the first time on the final invoice.

Part 7Chasing an unpaid invoice, step by step

If a payment goes overdue despite all that, escalate calmly and in order, keeping everything in writing. Most disputes settle long before the last step, but each step sets up the next if it doesn't.

First, check your footing

Before you fire off an angry message, take five minutes to know exactly where you stand. A calm chase from someone who clearly has their paperwork in order gets paid faster than an emotional one. Confirm it's genuinely late against the agreed window; pull up the signed quote and terms; note whether the customer is a business or a consumer (it decides what interest you can add, see Part 4); and check there isn't a genuine dispute hiding behind the silence, because interest and threats don't fix a snag they think they're owed.

Stage 1: the friendly reminder

Assume it was simply missed, because often it was. A short, warm message with the invoice attached clears a surprising number.

Example wordingHi [name], hope you're well. Just a quick reminder that invoice [number] for [£amount] was due on [date]. I've attached it again in case it slipped through. If it's already on its way, ignore this and thank you. Any questions, give me a shout.

Stage 2: the formal reminder

Still polite, but clearly on the record. State the amount, the original due date, that it's now overdue, and a firm date by which you expect payment. This is also where you flag that interest and charges may start to apply.

Example wordingDear [name], invoice [number] for [£amount], due on [date], is now overdue. Please arrange payment by [date, e.g. 7 days]. If payment isn't received, I may add interest and costs as set out in our agreed terms / as allowed for commercial debts. Bank details are on the invoice; please let me know if there's any problem.

Stage 3: the letter before action

The final warning before a claim. In England & Wales the courts expect you to send one and give the debtor a fair chance to respond before you issue. Skipping it can count against you even if you win. A good letter before action sets out, clearly and without threats or insults:

  • Who you are and who owes the money, and what for (the job, the invoice number and date).
  • The amount: the debt, plus any interest and charges, shown as a clear total with how it's worked out.
  • A deadline to pay or respond: a reasonable period, and longer where the debtor is an individual or sole trader.
  • What happens next: that you'll start county court proceedings without further notice if it isn't resolved.
  • How to pay or get in touch, and an offer to discuss or accept a sensible payment plan.
Chasing a private individual or sole trader?There's a specific Pre-Action Protocol for Debt Claims that applies when a business chases a debt from an individual (including a sole trader). It asks for more detail and gives the debtor longer to respond (generally 30 days), often with an information/reply form enclosed. Getting this stage right protects your costs and your claim, so check the current GOV.UK / Ministry of Justice guidance, or take advice, before sending.

If it still isn't paid: small claims

For most straightforward debts in England & Wales you can use Money Claim Online (MCOL), which is built to be used without a solicitor. You pay a court fee to issue (scaled to the claim, recoverable if you win); the debtor can pay, admit, defend or ignore it; claims up to £10,000 in England & Wales are usually handled on the simpler, lower-cost small claims track. Remember that winning isn't the same as being paid. If a judgment goes unpaid you can ask the court to enforce it. Scotland and Northern Ireland have their own equivalent procedures, so check the route for where the debtor is.

Is it worth it?Before you issue, sense-check whether the debtor can actually pay: a judgment against someone with nothing is a hollow win. For a clear debt against a solvent customer who's just stalling, the small claims route is often quick, cheap and decisive, and the threat of it in a proper letter before action frequently does the job on its own. On qualifying B2B / subcontract work you may also have the right to suspend or refer the dispute to fast adjudication under the Construction Act (Part 3) instead.

Part 8What NOT to do

A strong position is easy to throw away. Any one of these can turn you from the wronged party into the one in trouble:

  • Don't rip out or "repossess" installed work to force payment. Once materials are fixed into a building they generally belong to the property owner, and removing or damaging them can land you with a criminal damage or trespass problem, even though you're owed the money.
  • Don't harass. Repeated aggressive calls, turning up at the house, or messaging at all hours can cross into harassment. Keep it written, businesslike and spaced out.
  • Don't make threats you can't carry out, or overstate the charges. Bluffing "I'll have the bailiffs round tomorrow" undermines you when the real letter arrives.
  • Don't go silent yourself. Letting it drift makes the debt harder to recover and weakens a later claim. Steady, documented escalation wins.
  • Don't badmouth them publicly. An angry review or social post about a named customer can expose you to a defamation claim and muddy your own case.

Part 9Your quick checklist

Before you start your next job (and if a payment later goes overdue), run through this:

  • Have I taken a deposit that covers my upfront materials?
  • Are bigger jobs broken into stage payments tied to milestones?
  • Is it clear what "complete" means and when the final balance is due?
  • Do my terms set out late-payment interest (and, for business jobs, the statutory rights)?
  • If there's retention, is the percentage and release date agreed and diarised?
  • Has the customer agreed to all of this, in writing, before work starts?
  • If it's overdue: have I sent a friendly reminder, a formal one, then a proper letter before action, keeping copies and staying calm?

Get it in writing —
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This guide is general information for UK tradespeople, current to the best of our knowledge in 2026. It is not legal, financial or debt-recovery advice, the law and figures can change, and the procedures differ across England & Wales, Scotland and Northern Ireland. How the rules apply depends on your specific contract and circumstances, so confirm anything significant with a qualified professional, or check GOV.UK. The example wording is a starting point, not a legal template. TradeDraft accepts no liability for decisions made on the basis of this guide. Questions: hello@tradedraft.co.uk.

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