Contractors in the UK: How to deal with late payment

As a contractor, you will inevitably have to deal with late payment issues. Not only can this cause cash flow problems, but it may also negatively affect your relationship with your clients.

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First things first

Before you proceed with supplying any goods or services, be sure to get your customer’s acceptance of your terms and conditions of business in writing.

To further protect yourself, quote the settlement date – which is usually 30 days – and late payment terms on your invoices.

A suggested debt-tracking timeline

To help keep track of any outstanding invoices, we suggest following the timeline below:

  • Month end: Issue a written statement of account
  • 30 days: Send a reminder for payment due
  • 45 days: Phone the customer and send a final demand notice
  • 60 days: Phone the client again and send a letter stating that the account will go on stop at 70 days
  • 70 days: Send a letter confirming that the account is on stop
  • 80 days: Send a solicitor’s letter outlining your intention to proceed with legal action if payment is not received within seven days
  • 90 days: Instruct solicitors to commence with legal action

Letter templates for chasing payment

Having to follow up for payment is an unpleasant experience for all involved, without having the extra worry of remaining professional and not harming working relationships. To help ensure your tone is business-like and effective, we’ve suggested a few templates below to help with the structure and wording of your letters.

Seven days overdue

Send a “reminder of payment” letter or email.

Fourteen days overdue

The “second reminder of payment” letter or email should explicitly, but politely, inform the client that they may incur additional charges owing to their original non-payment.

Still not paid?

The “final demand” is stronger in tone than the two previous letters. It also includes the dates and copies of your previous two emails or letters at the top.

What you can do to help yourself

To help ensure timeous payment, it’s worth checking that you’ve done everything to the letter and fulfilled any contractual agreements that have been made. This may include:


If you have a contractual agreement to provide your timesheets, ensure they are sent to the right person, on time. Delayed or incomplete paperwork not only means more work for everyone involved, but also increases the likelihood that you will not be paid on time.


Many contracts include clauses relating to the submission of invoices. To avoid the awkward situation of trying to follow up on an invoice that was either not correctly made out or submitted late, we recommend referring to your contract before submitting your first invoice.

Payment terms

Almost all contracts will stipulate payment terms. Be sure that you take note of these before signing. If you generally expect your invoices to be paid within 14 days, but the signed contract stipulates 30, you will have to adjust your cash flow expectations accordingly.

It’s also worth looking out for any clause linking your payment to payment being received from the ultimate end-user/client. While quite rare, these clauses can hinder any attempt in recovering non-payment.

Our experienced team of accountants understands that you have enough on your plate without having to worry about your accounting admin. Email us or visit our website to find out how we can save you time.