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Ask The Legal Expert: I Have Persistent Late Payers. What Can I Do?

View profile for David Owen
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David Owen, a Director in the Commercial Litigation team at JCP Solicitors, advises business owners on late payment issues. 

Late payments have been a persistent thorn in the side of SMEs for many years, with bigger and more robust businesses often being the worst culprits for delay. The issue has become particularly pressing for SMEs in the current climate with substantial pressure on cash flow due to rising overheads and the cost of living crisis.

Efforts by the Small Business Commissioner to encourage businesses to sign up to the Prompt Payment Code are laudable but offer little practical benefit to the many businesses dealing with this issue daily. The Federation of Small Businesses has described the situation as a “crisis” and have said at least 8% of its 1,200 members felt late payment was threatening the viability of their business.

However, there are things business owners can do to take control:

  • Make payment terms clear and unambiguous. Seek to negotiate or to renegotiate terms that anticipate potential delays in order to leave you with some headroom
  • Issue invoices promptly, send periodic reminders and don’t be afraid to nag! You’ll often get a better reaction to phone calls than sending standard form letters (though they are also needed)
  • If you have the benefit of contractual terms for late payment, use them. If you don’t, you might be able to rely on the Late Payment of Commercial Debts Act 1998. Do claim interest and your recovery costs/compensation where you can
  • Escalate without delay. If they’re outside payment terms and aren’t cooperating or communicating, instruct a solicitor to pursue payment. Simply receiving a Letter of Claim from a solicitor can be sufficient to get matters back on track but the option to pursue the debt through court proceedings is there if required

As a business owner, you might be wary of taking the legal route in case it sours your trading relationship. However, debtors will test your tolerance for late payments and seek to improve their cash flow at your expense. In order to build a fairer trading relationship and push yourself to the top of the payment run, it is important to be proactive.


Every situation is different so it is important to seek tailored advice. Contact David Owen on 02920 225 472 or email: david.owen@jcpsolicitors.co.uk.

David carries out a range of commercial litigation and recoveries work for both commercial and private clients and is responsible for JCP’s Commercial Debt Recovery practice, which is aimed at supporting commercial clients in recovering outstanding liabilities from slow or non-payers. He regularly advises on disputed debt claims and also undertakes insolvency and professional negligence-related litigation.