TaskMyJob
Ask a questionTry for free

When nobody pays

A customer will not pay: the sequence that works

Most unpaid invoices are not refusals. They are an invoice that reached the wrong inbox, a purchase order number nobody can match, or a payment run that happens on the 25th. The sequence below is in the order it is because each step costs less than the one after it, and the early ones settle the majority.

The thing most people get wrong

A UK business is entitled to statutory interest and a fixed sum when another business pays late, and almost nobody claims it — which is exactly why quoting the figure works. The rate is the Bank of England base rate plus eight per cent, running daily from the day after payment was due, and the fixed sum is £40, £70 or £100 depending on the size of the debt.

What you need to know

First, check it is actually a refusal

Confirm the invoice reached the person who pays rather than the person who ordered, that it carries their purchase order or reference, and when their payment run is. On commercial work a surprising share of "they are not paying" turns out to be an invoice sitting in a queue that nobody has rejected. A polite call establishing which it is costs nothing and changes what you do next.

Then a statement, not another copy of the invoice

A statement showing every unpaid invoice, its date and its age is harder to ignore than a reminder about one of them, and it is the document an accounts department is used to reconciling. Send it to the accounts address rather than the site contact, and ask for a date rather than for payment — a date is something somebody can give you.

Then the interest, in writing

Say what the debt is, what the statutory interest has reached, and what the fixed sum is, and say that the entitlement continues to accrue daily. It is the point at which an unpaid invoice stops being free to ignore. Work out the figure before you send it: a wrong number in a letter before action is worse than no number, and the base rate moves, so confirm the current one rather than reusing last year's.

Then the formal route, and the honest caveat

A letter before action with a deadline, then the small claims track for amounts up to £10,000, which is designed to be used without a solicitor. Before that point it is worth deciding what the relationship is worth: on repeat commercial work the answer is sometimes to settle for the principal and drop the interest, and that is a commercial decision rather than a failure.

Questions, answered

How much interest can I charge on a late invoice?

Between businesses, statutory interest is the Bank of England base rate plus eight per cent, simple rather than compound, accruing daily from the day after the due date. A contract can set its own remedy instead, so check what you agreed; consumers are not covered by the same Act at all.

What is the fixed sum, and is it per invoice?

It is a flat amount on top of the interest, once per late invoice: £40 for debts under £1,000, £70 for £1,000 up to £10,000, and £100 for £10,000 and over. The boundaries are exact and are where most calculators get it wrong — a debt of exactly £1,000 carries £70, not £40.

Will claiming interest lose me the customer?

Sometimes, and that is a judgement only you can make. In practice stating the entitlement and not applying it is a common middle course: it establishes that the clock exists without charging it. What rarely works is saying nothing for four months and then claiming four months of interest at once.

When should I stop chasing and write it off?

When the cost of continuing exceeds what you would recover, including your own time. That point comes sooner than most people expect on small balances. Writing one off is a decision to record rather than a thing to feel bad about — and the useful question afterwards is what would have caught it earlier: a deposit, stage payments, or a credit check.

Work out your own figure

The arithmetic on this page is free to use without an account — the late payment interest calculator runs the same code the invoices in TaskMyJob do, so what it shows you is what the software would put on the paperwork.

This is general information about how these rules work, not advice about your own affairs. Contracts can say something different, and your accountant knows your situation and this page does not.

See it being done

Step-by-step guides with a short recording of each one, free to read without an account.

See and chase what you are owed

Who owes you, how long it has been, and who to ring first.

Bill a customer once a month

A letting agent or a housing association who sends you forty jobs a month gets one invoice, with a line for each.

Ask for a deposit, the full amount, or nothing

What the customer has to pay before the job is in your diary.

All the guides and videos →

Also worth a look

The other two questions trades ask about getting paid.

Retention

Five per cent held back for a year is not an overdue invoice. What retention is, when it is actually due, and how to keep track of it.

CIS deductions

Why a £1,000 invoice is paid at £880, what the deduction is legally taken off, and why the total on the invoice does not change.

All advice →

Try it on your own work

60 days free with everything switched on, and no card to start. If you would rather ask something first, there is a person on the other end.

Start your free trialTalk to a person07976 748850

£29.99 a month for the whole business after the free 60 days.

Back to taskmyjob.co.uk