Late payments are a massive headache for UK freelancers and small business owners. If you’ve ever spent weeks chasing an invoice, you’re not alone, many UK small businesses report having to regularly deal with clients paying late. And it’s not just annoying, it can be damaging.
When payments don’t arrive on time, cash flow takes a hit, bills pile up, and stress levels rise. In some cases, late payments can even push a business to the brink. But there are ways to prevent this from happening. This article will explore why late payments are such a problem, what UK laws say about them, and practical steps you can take to make sure you get paid on time.
For large companies, a late invoice is often just an accounting delay. But for small businesses, late payments can mean not being able to pay rent, buy supplies, or cover essential costs. Cash flow is crucial, without it, even a profitable business can struggle to stay afloat.
According to a study by the Federation of Small Businesses, 50,000 small businesses close each year due to late payments. That’s a shocking figure. On average, UK small businesses are owed up to £22,000 in unpaid invoices, meaning a huge amount of money is stuck in limbo rather than being reinvested into businesses.
And it’s not just about the money. Chasing payments takes time. UK small businesses spend an estimated 56 million hours per year just following up on unpaid invoices. That’s time that could have been spent on growing the business, winning new clients, or just taking a well-earned break.
So, what’s being done about it?
If a client pays late, you do have legal options in the UK. The Late Payment of Commercial Debts (Interest) Act 1998 gives small businesses the right to charge interest and compensation for overdue invoices.
Here’s what you’re entitled to:
If a client still refuses to pay, you can escalate the issue to the Small Business Commissioner. They can investigate and apply pressure on businesses that don’t pay their suppliers on time.
There’s also the Prompt Payment Code, a voluntary UK initiative that encourages businesses to pay suppliers quickly. Large companies that sign up must pay 95% of small business invoices within 30 days. If your client is part of this scheme, you can hold them accountable.
But while these legal options exist, most freelancers and small businesses prefer to avoid disputes. So how do you make sure you get paid on time in the first place?
Many late payments happen because payment expectations weren’t clear from the beginning. Before starting any project, spell out your payment terms in a contract or email. Key things to include:
✔ When you’ll invoice (e.g., at the end of a project, halfway through, or upfront).
✔ Payment deadline (e.g., "Payment due within 14 days of invoice").
✔ Late payment penalties (mentioning statutory interest can help deter delays).
If a client pushes back against clear payment terms, that’s a red flag. Reliable businesses have no problem agreeing to fair payment conditions.
A late invoice is an easy excuse for a late payment. Send invoices as soon as work is completed and make sure they contain everything the client needs. Include:
📌 Your Xiva payment link for instant payment.
📌 The invoice number and due date.
📌 A clear description of services provided.
📌 Any required purchase order number (some larger businesses won’t process invoices without this).
Using a payment tool like Xiva ensures clients can pay instantly via a simple link or QR code, reducing friction and excuses for late payments.
The more effort it takes for a client to pay, the more likely they are to delay. Instead of relying solely on bank transfers, offer a simple payment link via Xiva.
With Xiva’s payment links and QR codes, clients can pay in seconds, no need for long bank details or logging into online banking. Just click, pay, done.
Why Xiva works for small businesses:
✅ Instant payment options – get paid quickly, without delays.
✅ No waiting for invoices to be processed – just send a link and get paid.
✅ Lower transaction fees compared to traditional payment methods.
When you remove friction, clients pay faster.
A polite nudge before the invoice is due can work wonders. Here’s a simple template:
📧 "Hi [Client], just a quick reminder that invoice #123 is due next week on [due date]. Let me know if you need anything from me to process this. Thanks!"
It keeps things friendly while making it clear you’re expecting payment. If the deadline passes, follow up with a firmer message.
If a payment is late, don’t let it slide. Send a message making it clear that statutory interest and late fees will apply if payment isn’t received soon.
Example:
📧 "Hi [Client], I noticed that invoice #123, due on [date], hasn’t been paid yet. As per UK late payment laws, statutory interest and fees may apply to overdue invoices. Please arrange payment as soon as possible to avoid extra charges. Let me know if you need any details. Thanks!"
Most clients will settle the invoice quickly to avoid added costs.
If a client continues to ignore your messages:
If the amount is large enough, you might also consider a debt collection agency, though they usually take a percentage of what they recover.
Late payments are frustrating, but they don’t have to be a constant battle. By setting clear terms, invoicing properly, and using Xiva’s instant payment links, you can reduce the risk of unpaid invoices and improve your cash flow.
And remember, you deserve to be paid on time for your work. If a client consistently pays late, ask yourself if they’re really worth keeping. The best clients respect your time and value your work enough to pay you when they should.
For small businesses and freelancers aiming to improve cash flow, streamline operations, and achieve sustainable growth, Xiva offers the ideal digital toolkit.
