Invoice payment terms for UK tradespeople

Understanding payment terms, UK late payment laws, and practical ways to get paid on time.

By SortedMateUpdated September 202610 min read

Common payment terms for trades#

Payment terms define when you expect to be paid. The right terms depend on the type of work, job size, and your relationship with the customer.

Payment on completion#

Best for: Small jobs (under £500), one-day work, domestic customers.

Payment is expected immediately when the job is finished. This is the simplest approach and avoids chasing payments later. For domestic work, this is often the expectation.

7-day terms#

Best for: Regular customers, medium jobs, established relationships.

Invoice is due within 7 days of issue. Short enough to maintain cash flow, but gives customers time to process payment. Common for repeat business customers.

14-day terms#

Best for: Business customers, larger domestic jobs.

A balanced option that gives customers reasonable time while not leaving you waiting too long. Increasingly common in the trades.

30-day terms#

Best for: Commercial customers, contract work, large businesses.

The traditional standard for business-to-business work. Be aware this can strain your cash flow, especially with multiple jobs.

Deposits: when and how much#

For jobs over £500 or with significant material costs, a deposit protects you from non-payment and covers your upfront expenses.

25% deposit: Standard for most medium jobs. Shows customer commitment without being off-putting.
50% deposit: Appropriate for larger jobs, high material costs, or new customers without references.
Material cost upfront: Alternative approach where you invoice materials separately before ordering.

Tip: Never start work without receiving the agreed deposit. If a customer refuses to pay a deposit, consider that a red flag.

The Late Payment Act#

The Late Payment of Commercial Debts (Interest) Act 1998 gives UK businesses the right to charge interest and claim debt recovery costs on late B2B payments.

Statutory interest#

If a business customer pays late, you can charge:

8% annual interest plus the Bank of England base rate
Interest accrues from the day after the payment due date
Current rate (January 2025): 8% + 4.75% base rate = 12.75% annual

Debt recovery costs#

You can also claim a fixed sum for debt recovery:

£40 for debts up to £999.99
£70 for debts between £1,000 and £9,999.99
£100 for debts of £10,000 or more

Important limitations#

The Late Payment Act only applies to business-to-business transactions. For domestic (consumer) customers, you cannot automatically claim statutory interest. You would need to include specific late payment terms in your contract.

Getting paid on time: practical tips#

1. Invoice promptly#

Send your invoice on the day you complete the work. The longer you wait, the longer you wait to get paid. Using invoicing software like SortedMate lets you invoice from your phone on-site.

2. Make payment easy#

Include your bank details clearly on every invoice. Consider offering card payments, many customers find bank transfers inconvenient and will pay faster with a card link.

3. Set clear expectations#

Discuss payment terms before starting work, ideally at the quote stage. If your terms are on the quote and invoice, there is no room for misunderstanding.

4. Send reminders#

Do not be afraid to chase. Send a friendly reminder 3 days before the due date, another on the due date, and follow up promptly if payment is late. Most late payments are due to oversight, not bad intentions.

5. Act on late payments#

The longer a debt goes unpaid, the harder it becomes to collect. Have a clear process:

Day 1 overdue: Polite email reminder
Day 7 overdue: Phone call + email
Day 14 overdue: Formal letter with interest charges
Day 30 overdue: Letter before action (warning of legal action)
Day 45+: Small Claims Court or debt collection

Dealing with disputes#

Sometimes customers refuse to pay because they are unhappy with the work. Handle disputes carefully:

Listen first: Understand their concern before responding.
Document everything: Keep records of all communications, photos of completed work, and signed agreements.
Offer a fix: If there is a genuine issue, offer to fix it. A small repair is better than unpaid invoices and bad reviews.
Do not withhold certification: If you are a Gas Safe or other registered tradesperson, you cannot withhold safety certificates for non-payment.

Small Claims Court#

If a customer refuses to pay and all other options are exhausted, you can take them to the Small Claims Court (for debts up to £10,000 in England and Wales).

The process is straightforward:

Send a formal letter before action giving 14 days to pay
If unpaid, file a claim online at Money Claims Online
Pay the court fee (based on claim amount)
The defendant has 14 days to respond
If they do not defend, you get a County Court Judgment (CCJ)

Note: A CCJ affects the customer's credit rating for 6 years, which often motivates payment.

FAQ

Frequently asked questions

What are standard payment terms for tradespeople in the UK?

The most common payment terms for UK tradespeople are: payment on completion (for small jobs), 7 days, 14 days, or 30 days from invoice date. For larger jobs, a deposit (typically 25-50%) upfront with balance on completion is standard practice.

Can I charge interest on late payments in the UK?

Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge statutory interest of 8% plus the Bank of England base rate on late B2B payments. You can also claim reasonable debt recovery costs. This applies to business-to-business transactions.

Should I ask for a deposit before starting work?

Yes, especially for larger jobs or jobs with significant material costs. A 25-50% deposit is standard practice. This covers your initial material costs, shows customer commitment, and reduces your risk if the customer cancels or does not pay.

What should I do if a customer does not pay?

Start with a polite reminder after 7 days overdue. Follow up with a formal late payment notice including interest owed. If still unpaid after 30 days, send a letter before action. As a last resort, you can use the Small Claims Court for debts under £10,000.

Do payment terms apply to domestic customers?

The Late Payment Act only covers business-to-business transactions. For domestic (consumer) customers, you cannot automatically charge statutory interest. However, you can include your own late payment terms in your contract, and you can still pursue debts through the courts.

How do I make my payment terms legally binding?

Include payment terms clearly on your quote and invoice. Have the customer agree to terms (ideally in writing) before starting work. Terms should state: when payment is due, accepted methods, and consequences of late payment. For larger jobs, consider a simple written contract.