PHAM NEWS | OCTOBER 2026 Business Matters


How to handle problems in chasing payment


Late payments are one of the biggest pressures facing small business owners, including tradespeople. Here, Rob Rees from Markel Direct provides expert tips for tradespeople on how they can handle overdue invoices and what steps they should consider if payment chasing begins to drag on.


F


or 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 fl ow and everyday business costs. The following points off er


some practical guidance on managing payment and maintaining a positive relationship with customers.


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 fi nding it diffi cult to get by fi nancially, while others may have experienced changes in their personal life which have 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.


 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


such as email and phone calls, while keeping everything factual and professional.


 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


Rob Rees Divisional director at Markel Direct


legal issues or reduce the likelihood of recovering payment. Some actions that tradespeople should avoid include:  Turning up unannounced


BY NUMBERS 47%


prompt payment was valued the most in a survey of 500 UK tradespeople


24%


around one in four adults reported that they fi nd it very or fairly diffi cult to get by fi nancially


24hrs


Markel Direct policy holders have access to a 24-hour legal advice helpline off ering debt recovery advice


and consistent. Shortly after the payment deadline passes, send a friendly reminder confi rming 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


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.


 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 fi xed 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


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A key way to avoid disagreements is to be clear upfront, using written contracts and detailed quotes and keeping written records of approvals and communications with the customer


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 aff ected 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 confi rmed, these changes could provide much-needed support for tradespeople and small businesses dealing with late-paying commercial clients.


 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 signifi cant, 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 diff erence.


At Markel Direct, all our policyholders receive access to a 24-hour legal advice helpline off ering debt recovery guidance, helping tradespeople understand their rights and pursue unpaid invoices more eff ectively 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 as the best protection While no business can eliminate the risk of late payments entirely, preventative steps can signifi cantly 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 fi rst 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. ◼ phamnews.co.uk/1026/22


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