Don't Accept Late Payment

Whilst many clients will be perfectly reasonable when it comes to paying you, there will be some that reduce, delay and withhold payments wherever they can. Don’t accept this. They have a contractual obligation to pay you within the agreed time – if you meet your obligations, don’t be afraid to insist that they meet theirs.

By being firm and show that you know your rights, you are less likely to be taken advantage of when it comes to getting paid and there are a number of actions that you can take if payment is not forthcoming.

Charging Interest

If a client pays you later than agreed, you have a legal right under the Late Payment of Commercial Debts (Interest) Act to claim interest on the overdue amount if your contract does not provide for it. You should make reference to this right in your contracts and on your applications for payment (see below) even if you don’t intend to actually charge interest, as it may act as a deterrent against late payment. Where you have agreed a credit period with a client, the payment is late if it is made after the last day of the credit period; if no credit period has been agreed, the Act sets a default period of 30 days.

We will exercise our statutory right to claim interest under the Late Payment of Commercial Debts (Interest) Act 1998 (at 8% over the Bank of England base rate) if we are not paid according to our agreed credit terms.

Suspending Work

If you have not been paid in full by the final date for payment and no effective notice to withhold payment has been given, you can issue notice of your intention to suspend work until payment is received. The notice period has to be at least 7 days under the Construction Act and some contracts may require longer than that.

Going to Adjudication

Once you have exhausted negotiations, you can go to adjudication to obtain what you are owed by referring the dispute to the adjudicator or Adjudicator Nominating Body (ANB) named in your contract. If the contract does not name an adjudicator or ANB, you can approach AICA, a named ANB in the JCT contracts. For further information on adjudication, contact AICA on 0844 249 5353 or visit www.aica-adjudication.co.uk.

Using a Third Party

If all usual efforts fail, a client may not pay until threatened. Send a final demand threatening the use of a third party, such as a debt collection agency, or use a solicitor to issue a strong letter before action to try to avoid proceedings. You can use the County Court to recover most debts although claims for debts under £5,000 may be brought under the small claims procedure which you can do yourself without engaging a solicitor by visiting www.hmcourts-service.gov.uk