Late payments are one of the biggest pressures facing small business owners, including tradespeople. While some customers will be open about delays, others stop responding altogether, leaving businesses unsure whether they are dealing with a communication breakdown, a dispute or payment avoidance.

For many sole traders and small businesses, waiting on payment is more than just frustrating. A recent study, which explored tradespeople’s experience of working with homeowners, found that prompt payment was valued the most by 47% of the 500 UK tradespeople surveyed. With fuel, materials and other overheads continuing to rise, delayed invoices can quickly put pressure on cash flow and everyday business costs.

Rob Rees, Divisional Director at Markel Direct, the trades business insurance specialist, provides expert tips for tradespeople on how they can handle overdue invoices and what steps they should avoid if payment chasing begins to drag on.

1. Remember that silence does not always mean refusal

One mistake tradespeople can make is assuming that a customer ignoring communication, or not responding, automatically has no intention of paying.

Some customers do not like admitting they are struggling to pay, with 24% of adults finding it difficult to get by financially, while others may have experienced changes in their personal life which has distracted them.

Even so, tradespeople should not leave things for weeks without following up. Before assuming a customer is refusing to pay, it is worth checking whether the invoice was actually received, whether the payment terms were properly explained beforehand, and whether the customer has raised any concerns about the job. Sometimes the issue can be as simple as an old email address, or the customer being away or off ill.

It is also a good idea to keep copies of invoices, emails and reminders in case the situation later turns into a formal dispute.

2. Start with regular follow-ups

Once those initial checks have been made, consistency is key. Repeated calls made out of frustration or emotional messages can sometimes make disputes harder to resolve.

A better approach is to keep communication polite, clear and consistent. Shortly after the payment deadline passes, send a friendly reminder confirming the invoice details and amount owed. If there is still no reply a few days later, follow up again in writing to ask whether anything is holding payment up.

If communication continues to dry up, try a mix of channels such as email and phone calls, while keeping everything factual and professional.

3. Avoid actions that could weaken your position

Not being paid, of course, causes frustration, but it is vital that this doesn’t result in actions such as public venting, naming and shaming, making threats or any other action which could weaken your position, should the matter escalate.

Certain actions can create legal issues or reduce the likelihood of recovering payment. Some actions that tradespeople should avoid include:

• Turning up unannounced at a customer’s home or business repeatedly
• Posting accusations on social media
• Removing installed items or undoing completed work without legal advice
• Making threats

Even where payment is overdue, businesses still need to act reasonably and professionally, as poorly handled disputes can sometimes become more damaging than the unpaid invoice itself.

4. Understand your rights under late payment legislation

Where work has been carried out for another business rather than a homeowner, tradespeople may be protected under late payment legislation.

Under the Late Payment of Commercial Debts (Interest) Act 1998, later amended in 2013, UK businesses are legally entitled to charge statutory interest on overdue business-to-business invoices where no alternative interest terms have been agreed.

The legislation allows creditors to add interest at 8% above the Bank of England base rate, alongside fixed compensation fees ranging from £40 to £100 depending on the size of the debt, as well as reasonable debt recovery costs. If no payment date has been agreed, invoices are generally considered overdue after 30 days.

The legislation is designed to help protect small businesses from the impact of late payments and encourage faster settlement of outstanding invoices. While it does not always guarantee that payment will be received, referencing the legislation in formal reminders can demonstrate that the tradesperson understands their legal position and is prepared to escalate matters if necessary.

On 19th May, ministers introduced the Small Business Protections Bill in the House of Lords, aimed at supporting small businesses affected by late payments. The proposed reforms include a 60-day cap on payment terms and mandatory interest on overdue payments set at 8% above the Bank of England base rate. While a date for the second reading has yet to be confirmed, these changes could provide much-needed support for tradespeople and small businesses dealing with late-paying commercial clients.

5. Know when to seek support

There comes a point where continued chasing can become time-consuming, stressful and commercially unproductive.

If communication has broken down entirely or the amount involved is significant, seeking professional support early can often prevent the situation from deteriorating further and help businesses avoid procedural mistakes that could weaken a future claim or recovery process.

This is where having the right trades insurance in place can also make a difference. At Markel Direct, all our policyholders receive access to a 24-hour legal advice helpline offering debt recovery guidance, helping tradespeople understand their rights and pursue unpaid invoices more effectively without taking time away from running their business. They also have access to the Markel Business Hub for practical guidance, covering everything from collecting a debt to avoiding unreliable payers.

Prevention is still the best protection

While no business can eliminate the risk of late payments entirely, preventative steps can significantly reduce problems later on. Tradespeople should aim to:

• Use written contracts and detailed quotes
• Clearly outline payment terms before work begins
• Invoice promptly
• Break larger projects into staged payments where possible
• Keep written records of approvals and communication
• Follow up on overdue invoices quickly rather than letting delays build

Having clear systems in place not only improves professionalism but can also make customers more likely to prioritise payment in the first place.

Please note: This article provides guidance for information purposes only. It should not be relied upon wholly when making or taking important business decisions – always seek the services of an appropriately qualified professional.