What payment terms should a tradesperson use?

Luke Nixon · 15 June 2026 · 7 min read

Tradesperson and customer settling a payment with terms agreed up front

For most jobs, the payment terms a tradesperson should use are a deposit where there are upfront or material costs, stage payments tied to completed work on bigger or longer jobs, a clear final balance on completion, and a stated due date and accepted payment methods on every invoice. Whether you trade as a builder, a sole tradesman, or under a limited company, the principles are the same: clear written terms protect your cash flow, and vague ones are how invoices end up unpaid and disputed.

What are payment terms, and why do they matter?

Payment terms are the conditions in your quote and invoice that set how and when you get paid – the deposit, any stage payments, the final balance, when each amount is due, and what happens if it is not paid on time. They matter because clear terms remove the wiggle room that lets a customer delay paying.

An Opinium survey for Direct Line business insurance found 81% of UK tradespeople are owed money on late invoices, chasing an average of £6,210 each [7]. Clear written terms are how you stay out of those numbers.

What payment terms should you use?

A deposit where it earns its place, stage payments tied to completed work on longer jobs, a clear final balance on completion, and a stated due date on every invoice. In detail:

A deposit, only where there are upfront costs – materials to buy, a diary slot to hold, made-to-order items. How much deposit should a tradesperson ask for covers the size question.
Stage payments tied to completed work, never money before the work. Each payment is released once that stage is finished, as in the standard JCT and RIBA domestic building contracts.
A final balance on completion, due within a stated window (often 7 days), once the customer is happy to sign off.
A clear due date and accepted methods on every invoice – bank transfer, card, or both.

This is the shape a Renofy agreement takes: the deposit, each stage payment, and the final balance sit against the milestones, so what is owed and what each payment covers is recorded against the work both sides agreed.

When should payment be due?

State an explicit due date on every invoice – "due within 7 days of invoice" or "due on completion" – rather than leaving it open. On homeowner work no statutory deadline applies, so if you do not write the date down there is no fixed rule for when payment becomes late. On commercial work the Late Payment of Commercial Debts (Interest) Act 1998 falls back to 30 days from the invoice date if you do not say otherwise [3][4], but even there it is cleaner to put your own term on the invoice than to rely on statute.

What does the law actually give you?

On a homeowner job, UK law gives you almost nothing automatically – your written terms are your protection.

Consumer Rights Act 2015 – homeowner work

Under the Consumer Rights Act 2015 [1], if no price was agreed, a reasonable price is implied. Anything you said or wrote about the work that the customer relied on – price, timescale, what was included – is also binding. That cuts both ways: it makes your written terms enforceable, and your loose verbal promises too. Put it in writing once, properly.

Construction Act 1996 – commercial work only

The Construction Act 1996, Part II [2] applies to commercial construction work. On jobs running over 45 days it gives you a legal right to staged payments and bans "pay when paid" clauses – where a main contractor only pays you after their customer has paid them. Section 106 takes residential work out of it: if you are working directly for a homeowner on their own home, the Act does not apply.

Late Payment of Commercial Debts (Interest) Act 1998 – commercial work only

On commercial work, the 1998 Act [3] lets you charge statutory interest of 8% over Bank of England base rate, plus fixed compensation (£40 / £70 / £100 depending on invoice size), on overdue invoices automatically [4]. It does not apply to consumer customers – so on a homeowner job you cannot charge that interest unless a fair late-payment term is in your agreement upfront.

The takeaway: on a homeowner job, your written terms are doing the work the statutes do for you on commercial work. Which is why your quote and invoice matter so much.

And the rules are tightening. The government's March 2026 response to its late-payment consultation [6] confirms a 60-day cap on commercial payment terms, new enforcement powers for the Small Business Commissioner, and stricter payment-performance reporting for large companies. The direction of travel is firmer rules on the commercial side, not the homeowner side – on homeowner work, your written terms still do the heavy lifting.

Can you charge interest or a fee for late payment?

Yes – automatically on commercial work under the 1998 Act, and on homeowner work only if it is a fair term written into your agreement upfront. The Consumer Rights Act 2015 [1] requires any late-payment fee or interest term to be fair and transparent, which means putting the figure on the quote before the customer accepts the job, not springing it on them once the invoice has gone unpaid. Spell out the rate and when it kicks in, and you have something that will hold up.

How do you put your payment terms in writing?

On the quote up front and on every invoice. The bare list:

The deposit, what it covers, and when it is due (see how much deposit should a tradesperson ask for for the size question).
Any stage payments, each tied to a specific completed milestone.
The final balance and when it is payable (for example, "due within 7 days of completion").
Accepted payment methods.
Whether prices include VAT, or VAT is added on top.
Late-payment terms – your interest rate and any fixed fee.
That variations are agreed in writing before the work is done – the line that stops extras turning into end-of-job arguments.

A written quote the customer accepts in writing is itself a binding contract in the UK – we covered the full picture in why you should create a contract with a customer. A digital agreement does the same job without paperwork.

What can you do if a customer does not pay?

Send polite reminders first; if those do not work, send a formal Letter Before Action; if that is also ignored, make a money claim through gov.uk [5]. Many settle at the Letter Before Action stage without reaching court.

A polite reminder a few days after the due date.
A firmer reminder a couple of weeks in, restating the amount and the due date.
A formal Letter Before Action (the written warning before a court claim). On a claim against a homeowner, the Pre-Action Protocol for Debt Claims requires giving 30 days to respond before issuing a court claim. On commercial work no formal protocol applies, but 14 days is standard.
A money claim through gov.uk [5]. For amounts up to £10,000 it goes to the small claims track in England and Wales, no solicitor needed, court fees start from £35.

On a commercial claim, add the statutory interest and fixed compensation from the 1998 Act [3] automatically. On a homeowner job, add interest and any late-payment fee only if it was a fair term in your written agreement.

General guidance, not legal advice. This article is general guidance for tradespeople working in England and Wales. Specific contracts and disputes – especially anything heading towards court – are worth running past a solicitor.

Renofy gives tradespeople a clean way to set out payment terms on a job: the deposit, stage payments tied to photo-backed milestones, the final balance, and a clear due date on each, with a written record both sides agreed before the work started.

References

Consumer Rights Act 2015 – reasonable price implied if none agreed; pre-contract information about the service is binding. https://www.legislation.gov.uk/ukpga/2015/15/contents
Housing Grants, Construction and Regeneration Act 1996, Part II (the Construction Act) – statutory right to stage payments on construction contracts of more than 45 days; section 106 excludes a construction contract with a residential occupier. https://www.legislation.gov.uk/ukpga/1996/53/part/II
Late Payment of Commercial Debts (Interest) Act 1998 – statutory interest at 8% over Bank of England base rate and fixed compensation on overdue commercial invoices; 30-day default where no payment date is agreed. https://www.legislation.gov.uk/ukpga/1998/20/contents
gov.uk – Late commercial payments: charging interest and debt recovery costs. https://www.gov.uk/late-commercial-payments-interest-debt-recovery
gov.uk – Make a court claim for money (Money Claim Online; small claims track up to £10,000 in England and Wales). https://www.gov.uk/make-court-claim-for-money
gov.uk – Late payment consultation: time to pay up – government response (24 March 2026). Costs of late payment to the UK economy, small-business closures, total amount owed in late payments, and forthcoming legislative measures (60-day cap on B2B payment terms, Small Business Commissioner enforcement powers, payment-performance reporting for large companies). https://www.gov.uk/government/consultations/late-payments-tackling-poor-payment-practices/outcome/late-payment-consultation-time-to-pay-up-government-response-web-version
Direct Line Group press release – Pay up! The average tradesperson is chasing £6,000 in late payments (8 October 2024). Opinium survey of 2,000 UK adults including 145 self-employed or business-owning tradespeople, fieldwork 23–27 August 2024: 81% of tradespeople surveyed are owed money on late invoices, chasing an average of £6,210 across roughly seven outstanding payments. https://www.directlinegroup.co.uk/en/news/brand-news/2024/081020242.html

Frequently asked questions

Do I legally have to give payment terms?

No, you do not legally have to set out written payment terms. But without them you have very little to fall back on when a customer drags their feet, especially on homeowner work – on jobs for residential occupiers the statutory protections that apply to commercial construction work do not, so what you write on the quote and invoice is your protection.

Can I charge a homeowner interest on a late payment?

Only if it is a fair term written into your agreement upfront. The statutory 8% over Bank of England base rate plus fixed compensation applies automatically to commercial work under the Late Payment of Commercial Debts (Interest) Act 1998, but not to consumer jobs – on those you have to set out the rate in your terms in advance for it to hold up.

What payment terms are normal for a small job?

Payment on completion, due within a short window – often 7 to 14 days – with bank transfer or card accepted. A tradesman doing a half-day repair or a small fitting job does not usually need a deposit unless materials are being bought in advance; if not, it is cleaner to invoice on the day the work is done.

When is a payment officially late?

When the agreed due date passes. For commercial work the Late Payment of Commercial Debts (Interest) Act 1998 falls back to 30 days from the invoice date if no due date is agreed, but on a homeowner job a builder needs to spell the due date out – with no statutory default in your favour, late only starts once the date you wrote down has passed.