If you run a small business you already know late payment in your gut. The work’s done, the invoice is out, and the money just doesn’t come. You don’t want to nag a customer you’ll need again, so you leave it a bit. Then a bit longer. Then it’s six weeks overdue and you’re quietly financing someone else’s business out of your own bank account.
It is not a small problem, and it is not just you.
The scale of it
The government’s own figures, published when it announced a crackdown in September 2024, are blunt. Late payments are linked to around 50,000 UK business closures a year, the average small business is owed about £22,000 in overdue invoices at any one time, and 52% of small firms get hit by late payment in a given quarter, somewhere near 2.8 million businesses (gov.uk). The Federation of Small Businesses has campaigned on this for years, because it’s one of the main reasons otherwise-healthy firms go under (FSB, Pay it Forward).
That £22,000 isn’t really a paperwork problem. It’s a cashflow problem wearing a paperwork costume. Businesses rarely fail because they aren’t profitable. They fail because the money they’re owed turns up later than the money they owe, and they run out of room in the gap. A profitable firm with £22,000 stuck in its overdue column and a wage run due on Friday is in real trouble, and no amount of being good at the actual work fixes that.
Why chasing harder never holds
The instinct is to get disciplined about it. Block out Friday afternoon, go through the ledger, send the emails. It never lasts, for three fairly human reasons. Chasing money from someone you have a relationship with is uncomfortable, so it’s the first job to slip when you’re busy, and you’re always busy. It’s inconsistent, so some invoices get chased on day three, some on day thirty, some never, and customers work out remarkably fast which of their suppliers actually follow up. And it lands the most expensive person in the business with the most repetitive task in the business.
Willpower is the wrong tool here. The fix is to take yourself out of the loop, so the chase happens whether you’re feeling brave that week or not.
What an automated chase actually looks like
A good automated chase, what we call a dunning ladder, isn’t a blunt robot firing threats. It’s the disciplined version of what a brilliant credit controller would do, running quietly in the background.
It starts before the invoice is even due, with a friendly heads-up, because most “late” payments are just forgotten ones and a nudge at the right moment heads them off entirely. On the day, a clear “this is due today” with a one-click way to pay. A few days over, a firmer but still warm reminder, where timing does far more work than tone: an invoice chased reliably on day four gets paid faster than one chased angrily on day forty. And once something’s properly overdue, real escalation, including the statutory interest and recovery costs UK businesses are entitled to under the Late Payment of Commercial Debts legislation, with the job only landing back on your desk when actual judgement is needed.
The system always knows which invoices are out, what stage each one is at, and what the next step is. Nothing slips, nobody gets chased twice by accident, and the second a customer pays, the ladder stops. You stop being the bad guy on a Sunday night and become the supplier who quietly always gets paid on time.
The law is already on your side
Most small businesses chase late payment as if they’re asking for a favour. They aren’t. If you’ve supplied goods or services to another business, the Late Payment of Commercial Debts (Interest) Act 1998 gives you a legal right to charge interest and recover costs when they pay late, and you don’t need it written into your contract for it to apply.
Two things sit underneath that right. The first is statutory interest, set at 8% above the Bank of England base rate, running from the day after the payment was due. The base rate moves, so the headline figure moves with it. As of the Monetary Policy Committee’s June 2026 decision the base rate is 3.75% (Bank of England), which puts statutory interest at 11.75% a year while that holds. The second is a fixed sum towards your recovery costs, which steps up with the size of the debt: £40 for a debt under £1,000, £70 for a debt of £1,000 up to £9,999.99, and £100 for a debt of £10,000 or more. If your actual costs of chasing run higher than the fixed sum, you can claim the difference on top (Late Payment of Commercial Debts (Interest) Act 1998).
The point of mentioning any of this on an invoice isn’t to start a fight. It’s that a customer who knows the clock is running, and running at a real number, pays sooner than one who assumes late payment is free. Most never let it reach the interest stage at all once they understand it’s there.
What it’s actually costing you
Say you send a £6,000 invoice and it runs 60 days past due. Here’s roughly what the law lets you put back on the table, at the current base rate.
| Item | Working | Amount |
|---|---|---|
| Invoice value | — | £6,000.00 |
| Statutory interest rate | 8% + 3.75% base rate | 11.75% / year |
| Interest accrued | £6,000 × 11.75% ÷ 365 × 60 days | £115.89 |
| Fixed recovery sum | £1,000–£9,999.99 band | £70.00 |
| Recoverable on top of the debt | £185.89 |
Illustrative figures.
The £185.89 is the part you’re legally entitled to reclaim. The quieter cost doesn’t show up in that table at all: for two months you went without £6,000 you’d earned. That’s £6,000 you couldn’t use to buy stock, cover a wage, take on the next job, or simply leave in the account so you weren’t lying awake about it. You were, in effect, lending an interest-free £6,000 to someone else’s business. Do that across a handful of overdue invoices and you’re running a small bank for your customers without meaning to, which is the same drag we put numbers to in what admin really costs.
A reminder button isn’t a chase
Plenty of accounting tools have a “send a reminder” feature, and it doesn’t fix this, because real chasing is shaped by your trade. A letting agent’s ladder has to respect deposit and arrears rules. A solicitor’s has to sit cleanly alongside client-account conduct. A trade business wants the chase to stop the instant a card payment lands, so a paying customer never gets a stroppy email by mistake. Generic reminders know none of that, so they get switched off the first time they embarrass you. A chase built around your terms, your payment methods and your sector’s rules is one you’ll actually leave running.
What we’d build
This is one of the most common and highest-return things we build, because it turns admin you dread into cash you’re already owed. We’ll scope an invoice-and-chase ladder around how your business actually invoices and gets paid, wire it to the tools you already use, agree the cost in writing, then host and run it so it just keeps working. It’s the same idea as making sure an enquiry never slips through the cracks, pointed at the other end of the job: the part where the money’s owed but hasn’t landed.
If there’s money sitting in your overdue column right now, that’s the conversation to have. Tell us how you invoice and we’ll sketch what we’d build to make the chasing stop being your job.