How to Chase a Late Payment Without Losing the Client
The money was due at the end of the month. It is now the fifteenth, nothing has arrived, and you have typed the same message three times without sending it. The client is a good one, and you do not want to be the person who nags. Most people in that position wait too long, and the wait is what makes the message feel harder.
First, know when it is actually late
If you and your customer agreed a payment date, that date counts. According to the government's guide, an agreed date between businesses should usually be within 60 days, and you can agree a longer period as long as it is fair to both sides. If you agreed nothing, the law says payment is late 30 days after the customer receives your invoice, or after you deliver the goods or service if that is later.
Write the date down when you send the invoice. A clear date makes every later message easier, because you are pointing to something you both knew.
Three messages, each a little firmer
Day one after the due date: assume an oversight. Short and warm, with everything needed to pay in one place.
Hi Sam, a quick note to check that the payment for the project reached you. Here is the link again in case it got buried. Thanks for confirming when it is on its way.
A week later: name the amount and the date. Still polite, but now specific.
Hi Sam, I have not yet seen the payment of £1,200, which was due on the 30th. Could you let me know by Friday when I can expect it? The payment link is below.
Two weeks later: say what happens next. This is the first message that mentions your rights, and it works best when it is written without anger.
Hi Sam, the payment is now two weeks overdue. I would rather settle this simply. If I do not receive it by the 20th, I will add late payment interest and the fixed recovery sum that the law allows, and I will need to handle it more formally.
Phone calls can replace the first or second message when you know the person well. Keep a written follow-up either way, so there is a record of what was agreed.
What the law lets you add
When your customer is another business, the government's guide on late commercial payments says you can charge statutory interest, which is 8% plus the Bank of England base rate. You cannot claim it if your contract sets a different interest rate. You can also charge a fixed sum for the cost of recovering the payment, once for each payment: £40 for a debt up to just under £1,000, £70 from £1,000 to just under £10,000, and £100 from £10,000. If you decide to add interest, the guide says to send a new invoice.
A worked example, with the base rate set at 4% only for the arithmetic (check the current rate yourself): on £1,000, interest at 12% a year is £120 a year, about 33 pence a day, so roughly £10 after 30 days. The fixed sum for that debt is £70. Notice that for a small debt the fixed sum is bigger than the interest, which is worth knowing before you decide whether to claim it.
Whether to claim at all is a business decision. Many people mention the right in the third message and then waive it if the client pays quickly. If you want to keep the option, say so in your terms when you agree the work, so it never comes as a surprise.
A change that is still on its way
A Commercial Payments Bill is going through Parliament. It proposes a maximum of 60 days for payment terms, automatic interest on late payments and new powers for the Small Business Commissioner. At the time of writing it has not become law, and the Commissioner has said the aim is for it to pass by the end of this year or early next, with further legislation to follow before it takes effect. Until then, the rules described above are the ones that apply.
Where Edwin fits
Most late payments start with a payment request that went out too late or was hard to use. Edwin chases quotes that have gone quiet, and once a quote is accepted he sends a payment link, so the way to pay is in your client's hands from the start. You approve what he sends. See how Edwin works.
This is general information, not legal advice. Check the official guidance before you charge interest or recovery costs.