How to chase late payment in construction without losing the relationship

General guide only, not legal advice.

If you are a subcontractor waiting on money, you are not short of advice, but you are probably short of time. This guide gives you a calm, repeatable routine for chasing late payment, the records that make it easier, and a plain-English picture of the rules, with links to the official sources. You can do all of it today without buying anything.

Why payment goes late (and why records decide most disputes)

Late payment in construction is rarely one dramatic event. It is usually a slow drift: an application sent late, a variation never agreed in writing, a retention date nobody noted, a "we have not got your invoice" that you cannot disprove.

The common thread is records. When you can show what you applied for, when you sent it, what was agreed, and when it fell due, the conversation changes from "I think I am owed" to "here is the position". That is also the strongest footing if anything formal is needed later.

Step 1: Know your dates before you chase

Find these in your subcontract or order, and write them in one place:

• When you should submit an application (a fixed date each month, or on completion of stages).
• The due date for payment.
• The final date for payment.
• How the contract deals with retention, and when it is released.
• Who you send documents to, and how (email, portal, post).

If the contract is vague or missing, that matters too. Note it. Do not guess.

Step 2: A polite chasing sequence

Keep it factual and keep the same tone every time. A suggested rhythm:

Sample wording you can adapt:

"Hi (name), I am following up on application (number) dated (date) for (amount), which fell due on (date). I cannot see payment or a notice against it. Could you let me know when I can expect payment, or send me the notice if a different amount is being paid? Thanks, (name)"

Always ask what the reason is. A clear answer, even a disagreement, is easier to work with than silence.

Step 3: Understand payment notices and pay less notices (general level only)

The main law here is Part 2 of the Housing Grants, Construction and Regeneration Act 1996, often called the Construction Act. It applies to many, but not all, construction contracts. Whether it applies to yours, and how, can depend on the work, the parties and the contract terms.

In general terms:

• A payment notice says what sum the payer (or the payee, depending on the contract) considers due, and how it was calculated. The Act requires construction contracts to provide for this, and it is tied to the payment due date. The sum can be zero. See section 110A: https://www.legislation.gov.uk/ukpga/1996/53/section/110A
• A pay less notice is how a payer says they intend to pay less than the notified sum. It must say what sum they consider due and how it was calculated, and it must be given in time before the final date for payment. See section 111: https://www.legislation.gov.uk/ukpga/1996/53/section/111
• The timings and who must give which notice vary by contract. Where a contract does not meet the Act's requirements, the Scheme for Construction Contracts fills the gap. The Scheme is at https://www.legislation.gov.uk/uksi/1998/649 and the government's page is at https://www.gov.uk/government/publications/the-scheme-for-construction-contracts-england-and-wales-regulations-1998-government-and-consultation-responses

We have deliberately not given day counts here. They depend on what your contract says and the version of the rules that applies. Read your own contract and check the legislation, or take advice.

Why this matters in practice: if you were due money and no valid notice arrived, that is something to raise politely and in writing. But do not assume a missing or late notice settles the question. Ask someone qualified before you rely on it.

Step 4: Statutory interest and fixed sums

If another business pays you late, the Late Payment of Commercial Debts (Interest) Act 1998 can allow you to claim statutory interest and a fixed sum for debt recovery costs, unless your contract sets a different, substantial remedy. The government guidance explains how it works for business-to-business debts:

• Interest on late commercial payments: https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt
• Fixed sum debt recovery costs: https://www.gov.uk/late-commercial-payments-interest-debt-recovery/claim-debt-recovery-costs
• When a payment becomes late: https://www.gov.uk/late-commercial-payments-interest-debt-recovery

The interest rate is set by reference to the Bank of England base rate, so it changes. Check the current figures on gov.uk rather than relying on a number in an article. Whether you apply it is a business decision: some subcontractors use it as a final step, and others keep it in reserve to protect the relationship.

Step 5: If it is still not paid

Options exist beyond reminders, and the right one depends on the amount, the contract and how the relationship stands. In general terms, the next steps include a formal letter before action, adjudication (a fast route often used in construction disputes), or court proceedings. Some contracts and the Act also give rights to suspend work in certain circumstances, but that is a serious step that needs advice first.

Your trade body, a solicitor, or the government pages above are the place to start. We do not give legal advice and nor should this guide be read that way.

A simple monthly admin routine

1. Submit your application on the date your contract says, and keep proof of sending.
2. Log every variation in writing and get it agreed before you do the work where you can.
3. Record the due date and final date for payment the moment you submit.
4. Diarise your chase dates from the table above.
5. Note retention held and the release date.
6. Save every email, notice and reply in one folder named for the job.

If this feels like a second job, that is the real problem. Admin is where payments get lost.

Checklist: before you chase

• I have my contract or order and have found the payment dates
• My application is dated, numbered and was sent to the right person
• I have proof it was sent and received
• Any variations are written down and agreed
• I know the amount, the due date and the final date for payment
• I have checked whether a payment notice or pay less notice has arrived
• I have a diary note for each follow-up
• I have kept a calm tone in every message

When this is not worth it

A formal chasing process may not be worth the effort if:

• The sum is small and the relationship with a good client matters more. A friendly phone call may do better.
• Your own paperwork is incomplete: no application, no agreed variation, no contract. Fix that first.
• The amount is disputed on its merits. That needs negotiation or advice, not just reminders.
• You are chasing something that falls outside the contract.

Equally, software or automation will not help if your underlying records are missing. The routine above works on paper first.

How we can help

At Localdesk, we help UK construction businesses organise applications, variations, retention and payment chasing so less falls through the cracks. We do not give legal advice and we do not promise any particular result. If you would like to talk through where your payment admin leaks time, book a discovery call. You can also read about subcontractor payments, our construction work, and how an AI receptionist can catch enquiries while you are on site.

FAQ

Sources and further reading

• Housing Grants, Construction and Regeneration Act 1996, section 110A (payment notices: contractual requirements)
• Section 111 (pay less notice)
• Scheme for Construction Contracts (England and Wales) Regulations 1998 on legislation.gov.uk
• Scheme for Construction Contracts, gov.uk publication page
• gov.uk, Late commercial payments