Should I chase a late payment?

Cerno is a private AI boardroom that runs consequential decisions through a structured process and returns a brief like the one below. The scenario is illustrative: a sole trader owed £4,000 by a limited company client, 45 days past its 30-day terms, with a second job for the same client already booked. The client accounts for about a quarter of the year's revenue.

The decision in plain terms

Chasing a late payment feels like a choice between cash and goodwill. In practice the two are less opposed than they look. A late invoice is often stuck in someone's process rather than refused, and a polite, specific chase can get it paid without damage. The real decision is how fast to escalate, and when to stop being polite.

Not chasing has a cost too. A client who learns your invoices can wait will let them wait. And for a sole trader, a single £4,000 invoice can be the difference between a comfortable month and a difficult one.

The numbers that matter

When it is late. If no payment date was agreed, payment between businesses is late 30 days after the customer receives the invoice or the goods or services, whichever is later. Agreed terms are normally up to 60 days; longer terms must be fair to both businesses.

Statutory interest. Under the Late Payment of Commercial Debts (Interest) Act 1998, unless your contract sets a different rate, you can claim interest at 8% above the Bank of England base rate. The base rate used is the one in force on 31 December for debts that become late between January and June, and on 30 June for debts that become late between July and December. Interest is worked out daily on the amount owed.

Fixed compensation. Once statutory interest starts, you can also claim a fixed sum per invoice: £40 for debts under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. Where reasonable recovery costs are higher, you can claim the difference.

Before going to court. The court's pre-action rules expect a letter setting out the claim, the facts, what you want and how the amount is calculated, and a reasonable time to respond: 14 days in a straightforward case. If the person who owes you is an individual, including a sole trader, the Pre-Action Protocol for Debt Claims applies, with its own information sheet and reply form and a 30-day reply period.

Small claims. The small claims track is the normal track for claims worth up to £10,000. Money Claim Online can be used where you know the amount, are claiming against no more than two parties, and both sides have an address in England or Wales. Court fees for some bands: £35 up to £300, £70 for £500.01 to £1,000, £205 for £3,000.01 to £5,000, £455 for £5,000.01 to £10,000. Further fees can apply for a hearing or enforcement.

Time limit. In England and Wales, a claim on a simple contract cannot be brought more than six years after the cause of action arose.

An illustrative example. On the £4,000 invoice in the brief, the fixed compensation is £70. Statutory interest runs from the day the invoice became late at 8% above the relevant base rate, worked out daily. If it came to a claim, the amount including interest would sit in the £3,000.01 to £5,000 band, with a court fee of £205.

What the board weighed

Goodwill is not the same as silence. The Customer Advocate's dissent was about tone, not about whether to chase. A first chase that leads with interest and compensation can read as hostile to a client whose invoice is just stuck. The board adopted the sequence: ask first, then put your rights in writing. Naming statutory interest in the second message is a fact, not a threat.

The next job is leverage, and a cost. Pausing booked work until the invoice is paid is the most effective step a sole trader has. The CFO's dissent is that it also delays the next invoice. The board kept it because continuing to work for a client who is not paying increases the amount at risk.

Is the client in trouble? A client who stops answering, or pays other suppliers but not you, is a different case. If there are signs of financial difficulty, speed matters more than tone, because an early claim may be the difference between being paid and joining a queue.

Court is a tool, not a goal. A clear letter before action, from someone plainly prepared to claim, gives the client a reason to pay before it costs them more: the fee and paperwork are modest for you, and a court judgment is a problem for them. The board treated the claim as the credible last step that makes the earlier steps work.

When the answer flips

If the work is genuinely disputed, resolve the dispute first. Statutory interest and a court claim do not fix a disagreement about quality or scope.

If the client is an individual consumer, the 1998 Act does not apply; it covers business-to-business debts. You can still chase and claim, but statutory interest and fixed compensation are not available in the same way, and the debt claims protocol applies.

If the amount is small and the relationship is large, you may choose to waive interest as a goodwill gesture while still insisting on payment. That is a decision to make deliberately, not by default.

If the client has no assets or has become insolvent, a judgment may be hard to enforce. Weigh the time and fees against the realistic recovery, and consider writing it off. The fire this client brief covers the wider question.

Common mistakes

• ›Waiting too long to send the first chase. The longer an invoice sits, the more normal late payment becomes.
• ›Leading with a threat. Ask what is holding it first; put rights in writing second.
• ›Not knowing your own terms. Your contract may set a payment date or an interest rate that changes the numbers.
• ›Doing more work for a client who has not paid. It adds to the amount at risk.
• ›Skipping the letter before action. The court expects it, and it gives the client one last clear chance to pay.

Sources

• ›Late commercial payments: charging interest and debt recovery (GOV.UK)
• ›Interest on late commercial payments (GOV.UK)
• ›Claim debt recovery costs on late payments (GOV.UK)
• ›Late Payment of Commercial Debts (Interest) Act 1998, section 5A (legislation.gov.uk)
• ›Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4 (legislation.gov.uk)
• ›Make a court claim for money: court fees (GOV.UK)
• ›Make a court claim for money: make a claim (GOV.UK)
• ›Civil Procedure Rules, Part 26 (justice.gov.uk)
• ›Practice Direction: Pre-Action Conduct and Protocols (justice.gov.uk)
• ›Pre-Action Protocol for Debt Claims (justice.gov.uk)
• ›Limitation Act 1980, section 5 (legislation.gov.uk)

Figures checked on 7 October 2026.