How to Deal With Late Paying Customers — A Practical Guide for Tradespeople

Late payment is one of the most frustrating problems tradespeople face. You have done the work, often spending your own money on materials, and the customer simply does not pay on time — or at all. It affects your cash flow, your ability to take on new jobs, and your stress levels. According to the Federation of Small Businesses, late payments cost the UK economy billions every year, and tradespeople are among the hardest hit.

The good news is that most late payment problems are preventable. And when they do occur, you have clear options for getting your money — from polite reminders to legal action. This guide covers both prevention and recovery, giving you a practical system for protecting your cash flow and dealing with non-payers.

Prevention Is Better Than Chasing

The best approach to late payments is to set things up so they rarely happen in the first place. Most late payment issues can be traced back to unclear terms, lack of documentation, or not asking for money at the right time.

Set Clear Payment Terms Before You Start

Every quote you send should include your payment terms — when payment is due, what methods you accept, and what happens if payment is late. This is not heavy-handed; it is professional. Customers who receive clear terms upfront rarely dispute them, because they know what they agreed to before the work began.

Your payment terms should state the deposit amount required before work starts, any stage payments for larger jobs, when the final balance is due (typically on completion or within a specified number of days), your accepted payment methods, and your late payment policy.

When your terms are written into a professional quote that the customer accepts before work begins, you have a much stronger position if payment issues arise later. For guidance on structuring your quotes properly, see our guide on what to include in a building quote.

Always Take a Deposit

Taking a deposit before starting work is standard practice in the trades and should be non-negotiable. A deposit serves three purposes: it demonstrates the customer is serious and has the funds, it covers your initial material costs so you are not out of pocket, and it reduces the final balance — meaning less money at risk if problems occur.

For most residential work, a deposit of twenty to thirty per cent of the total job value is standard and reasonable. For larger projects costing several thousand pounds or more, a staged payment schedule is better — perhaps a deposit to start, a payment at the halfway point, and the balance on completion.

If a customer refuses to pay a deposit, that is a red flag. Reputable, financially stable customers understand why deposits are necessary. Someone who pushes back on a reasonable deposit may well push back on the final payment too.

Use Stage Payments for Larger Jobs

For any job lasting more than a few days or costing more than a couple of thousand pounds, stage payments protect your cash flow and limit your risk. A typical structure for a medium-sized project might be thirty per cent deposit before work starts, thirty per cent at an agreed milestone (such as first fix complete), and forty per cent on completion.

The key is to tie payments to clear, verifiable milestones — not to dates. This way, neither party can dispute whether a payment is due. The customer pays when they can see the work has reached the agreed stage, and you receive regular payments throughout the project rather than waiting for one large sum at the end.

Invoice Immediately

One of the simplest things you can do to improve your payment speed is to invoice the moment the work is finished. Every day you delay sending an invoice is a day added to your payment timeline. If you finish a job on Friday and do not invoice until the following Wednesday, you have effectively given the customer five extra days.

Ideally, send your invoice the same day you complete the work — before you leave the site if possible. Many tradespeople use mobile invoicing tools to create and send invoices from their phone while still at the customer's property. For tips on effective invoicing, read our guide on how to invoice as a tradesperson.

Make Payment Easy

The easier you make it for customers to pay, the faster they pay. Offer multiple payment methods — bank transfer, card payment, and cash as a minimum. Include your bank details on every invoice (sort code, account number, and the reference you want them to use). If you accept card payments, include a payment link or instructions.

Bank transfer is the preferred method for most customers and is free for you to receive. Payment terminals or apps like SumUp or Zettle let you take card payments on site for a small transaction fee (typically one to two per cent). The convenience of being able to pay immediately often results in same-day payment rather than the customer "doing it when they get round to it."

What to Do When Payment Is Late

Despite your best prevention efforts, some customers will pay late. Here is a step-by-step approach to chasing payment that escalates gradually and preserves the relationship where possible.

Day One — Friendly Reminder

On the day payment becomes overdue, send a polite reminder. This can be a text message, email, or even a friendly phone call. Keep it casual and assume the best — many genuinely forget or think they have already paid.

Something like: "Hi [name], just a quick reminder that invoice [number] for [amount] was due on [date]. Would you be able to get that settled when you get a chance? My bank details are on the invoice. Thanks!"

Most late payers respond to a simple reminder. They have been busy, the invoice slipped their mind, or they had a problem with their bank. A friendly nudge is usually all it takes.

Day Seven — Follow-Up

If a week has passed with no response or payment, follow up with a slightly more formal message. This time, email or write rather than text — you want a record of the communication.

Reiterate the amount due, the original due date, and your bank details. Politely ask for a response — even if they cannot pay the full amount immediately, you want to know what is happening. Silence is worse than a difficult conversation.

Day Fourteen — Formal Request

At two weeks overdue, send a formal payment request. This should be a written letter or email using professional language. State the facts: the work that was completed, the date of your invoice, the amount outstanding, and the original payment terms. Set a new deadline — typically seven days from the date of this letter — and state that you will need to consider further action if payment is not received.

You do not need to specify what "further action" means at this stage. The implication is usually enough to prompt payment.

Day Twenty-One — Final Demand

If three weeks have passed with no payment and no reasonable explanation, send a formal final demand. This letter should be firm but professional. It should clearly state the amount owed including any interest you are entitled to charge, that this is a final request for payment, the deadline (usually seven to fourteen days), and what action you will take if payment is not received — specifically, that you will pursue the debt through the county court.

Send this by email and by post (recorded delivery if possible) so you have proof it was sent and received. In many cases, a final demand letter is the point where people pay — the prospect of court action tends to focus the mind.

Day Thirty-Five — Consider Legal Action

If your final demand has been ignored, you have several options for recovering the money.

Legal Options for Recovering Payment

Small Claims Court

For debts up to ten thousand pounds in England and Wales (five thousand pounds in Scotland), the small claims track of the county court is the most practical option. The process is designed to be used without a solicitor and is relatively straightforward.

You can start a claim online through Money Claims Online (MCOL) on the GOV.UK website. The court fee depends on the amount you are claiming — thirty-five pounds for claims up to three hundred pounds, rising to four hundred and fifty-five pounds for claims between five thousand and ten thousand pounds. These fees are added to your claim, so the defendant pays them if you win.

How the Small Claims Process Works

Step one: Submit your claim online with details of what you are owed and why. Attach evidence — your quote, the customer's acceptance, your invoice, photos of the completed work, and records of your payment reminders.

Step two: The court sends the claim to the defendant, who has fourteen days to respond. They can admit the claim and agree to pay, dispute it, or ignore it.

Step three: If the defendant admits the claim or does not respond, you can request a County Court Judgment (CCJ) — a court order requiring them to pay. A CCJ on someone's credit record is a powerful motivator.

Step four: If the claim is disputed, the case goes to a hearing (usually informal, in a small room with a district judge). You present your evidence, they present theirs, and the judge makes a decision. In most cases, if you have a written quote with payment terms and evidence the work was completed, the judgment will be in your favour.

Letter Before Action

Before starting court proceedings, it is good practice (and expected by the court) to send a "letter before action." This is essentially a final warning that gives the debtor fourteen days to pay before you issue a claim. It should reference the debt, state that you intend to commence proceedings through the county court if payment is not received, and note that court costs and interest will be added to the claim.

You can write this yourself — you do not need a solicitor. The letter carries weight because it demonstrates you are serious about pursuing the debt legally.

Statutory Interest and Compensation

Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge interest on late commercial payments at a rate of eight per cent plus the Bank of England base rate. You can also claim fixed compensation on top: forty pounds for debts up to one thousand pounds, seventy pounds for debts between one thousand and ten thousand pounds, and one hundred pounds for debts over ten thousand pounds.

For residential customers, you can charge interest if your terms and conditions include a late payment clause. This is one of the reasons including proper terms in your quotes is so important — it gives you the legal basis to charge interest and creates an incentive for customers to pay on time.

Mediation

If the customer is disputing the quality of your work rather than simply refusing to pay, mediation can be a useful step before court. The small claims court offers free mediation as part of the process, where an independent mediator tries to help both parties reach an agreement.

Mediation works well when there is a genuine disagreement about whether the work meets the agreed standard. It is faster and less stressful than a court hearing, and most mediations result in a settlement. If mediation fails, the court hearing proceeds as normal.

Debt Collection Agencies

For debts where you do not want to go through the court process yourself, a debt collection agency can pursue payment on your behalf. They typically charge a percentage of the recovered amount (often fifteen to twenty-five per cent) or a fixed fee. This can be cost-effective for larger debts where the effort of court proceedings is not justified by the amount.

Be aware that debt collectors can send letters and make phone calls, but they have no special legal powers. They cannot force someone to pay. For genuinely reluctant payers, court action may still be necessary.

Dealing With Disputes About Quality

Sometimes, late payment is not about a customer being difficult — it is about them being unhappy with the work. If a customer withholds payment because they believe the work is substandard or incomplete, you need to handle this differently from straightforward non-payment.

Take Complaints Seriously

If a customer raises a legitimate concern about the quality of your work, address it promptly and professionally. Visit the property, inspect the issue, and — if the complaint is valid — put it right at your own cost. This is not just good customer service; it is your legal obligation under the Consumer Rights Act 2015, which requires services to be performed with reasonable care and skill.

For guidance on handling complaints constructively, see our article on how to handle customer complaints.

Document Everything

When a dispute arises, documentation becomes critical. Take dated photographs of the completed work. Keep all written communication with the customer. Record any conversations (note the date, time, and what was discussed). If you return to site to address a complaint, photograph the issue before and after any remedial work.

This evidence protects you if the dispute escalates to court. A customer claiming your work was substandard faces an uphill battle if you can produce detailed photographs showing professional workmanship and written communication showing you were responsive to their concerns.

When the Complaint Is Not Genuine

Unfortunately, some customers manufacture complaints to avoid paying. They find fault with perfectly acceptable work or make demands that go far beyond what was agreed. Recognising this situation — and knowing it is different from a genuine complaint — is important.

If you believe a complaint is not genuine, state your position calmly in writing. Explain why you believe the work meets the agreed standard. Offer an independent inspection if appropriate. And be prepared to pursue the debt through the courts if necessary. Having a detailed quote with a clear scope of work makes it much easier to demonstrate that you delivered what was agreed.

Protecting Yourself Going Forward

Every late payment experience is an opportunity to tighten your processes. Here are the habits that protect experienced tradespeople from payment problems.

Written Agreements on Every Job

Never start work without a written agreement. This does not need to be a formal contract (though for larger jobs, it should be). A detailed quote that includes the scope of work, price, payment terms, and timeline — accepted by the customer in writing — gives you the documentation you need if problems arise.

Tools like QuoteSmith make this easy by generating professional proposals with all these elements included. When a customer accepts a QuoteSmith proposal, you have a clear, documented agreement about the work and the payment terms — which is exactly what you need to prevent and resolve payment disputes.

Trust Your Instincts

Most experienced tradespeople can spot potential problem customers early. Warning signs include haggling aggressively on price before the job starts, wanting work done before they have the budget ready, making vague or shifting requirements, bad-mouthing their previous tradesperson excessively, and pushing back on a reasonable deposit.

None of these are proof of a future payment problem, but they should put you on alert. When your instincts say something is off, take extra precautions — a larger deposit, more frequent stage payments, or simply declining the job. Turning down a two thousand pound job is better than completing it and never getting paid.

Keep a Cash Reserve

Having a cash buffer in your business means that a single late payment does not derail your finances. Aim to have enough in your business account to cover at least one month's expenses — van payments, insurance, fuel, and living costs. This gives you breathing room to chase late payments without the panic of needing the money to survive.

Review Your Terms Regularly

If you find that late payments are a recurring problem, review your terms. You might need to take larger deposits, set shorter payment deadlines, or add a late payment interest clause. Learn from each situation and adjust your processes accordingly.

A Quick Reference for Chasing Late Payments

To summarise the chasing process in a clear sequence.

Day of completion: Send your invoice immediately with clear payment terms.

Payment due date passes: Send a friendly text or email reminder.

Seven days overdue: Send a follow-up email reiterating the amount and your bank details.

Fourteen days overdue: Send a formal written payment request with a seven-day deadline.

Twenty-one days overdue: Send a final demand letter referencing potential court action.

Thirty-five days overdue: Send a letter before action giving fourteen days' notice of court proceedings.

Forty-nine days overdue: Submit your claim through the small claims court if still unpaid.

This timeline is a guide, not a rigid rule. Some situations warrant faster escalation (a customer who has gone silent and is not responding to any communication) and some warrant more patience (a customer who is communicating and has a genuine temporary cash flow problem). Use your judgment, but do not let weeks turn into months — the longer a debt goes unpaid, the harder it becomes to collect.

The Bottom Line

Late payment is a reality of running a trade business, but it does not have to be a constant problem. Setting clear terms upfront, taking deposits, invoicing immediately, and following a structured chasing process deals with the vast majority of cases. For the rare situations that require legal action, the small claims court is accessible, affordable, and designed to be used without professional legal help.

The tradespeople who rarely have payment problems are not just lucky — they are professional, documented, and consistent in how they handle the financial side of every job. Start as you mean to go on, and most customers will pay on time, every time.