How to automate invoice chasing in the UK without upsetting clients

Short answer

Automate the reminders, statements and payment links, and keep disputes and key clients with a person. A UK supplier can claim statutory interest on a late business invoice at 8% over Bank Rate, which is 11.75% a year for interest that starts to run between 1 July and 31 December 2026, plus a fixed £40, £70 or £100. Late-paid UK firms with 10 to 49 staff spend 138 hours a year chasing, London Economics found in 2025.

Deniz SancarFounder of Yarigai, London. Updated 7 November 2026.

Yarigai is a done-for-you AI agency that builds these systems, so read this with that in mind. Every price and figure links to its source below. Read this page as Markdown.

At a glance

Question	Answer
Small firms affected by late payment	69% (FSB Small Business Index, reported by Credit Connect, April 2026)
UK businesses affected each year	28%, over 1.5 million (London Economics, July 2025)
Chasing time, late-paid firms with 10 to 49 staff	138 hours a year, worth £2,337 in staff time
Statutory interest	8% a year over Bank Rate; 11.75% for interest starting 1 July to 31 December 2026
Fixed compensation per late invoice	£40 under £1,000; £70 from £1,000 to £9,999.99; £100 from £10,000
When payment is late if no date was agreed	30 days after the invoice or delivery, whichever is later
Built-in reminders	Xero before or after the due date; QuickBooks up to three, within 90 days of the due date
Firms that began chasing before the due date to cut late payment	4% (London Economics, 2025)

What late payment costs a UK business

Late payment is common and expensive for small firms. The best UK data is a July 2025 study by London Economics for the Department for Business and Trade, based on a survey of 1,455 businesses.

28% of UK businesses, over 1.5 million, are affected by late payment each year.
Affected firms with 10 to 49 staff are owed £52,081 in late payments at any one time, on average.
Those firms spend 138 hours a year chasing, which the study values at £2,337 at £16.92 an hour.
Late payment closes about 14,000 businesses a year, 38 a day.

The FSB tracks the problem every quarter. Credit Connect's 7 April 2026 report on the FSB Small Business Index for Q1 2026 says 69% of small firms were affected by late payment. FSB's own release was not available to check.

Few firms chase early. Asked what they had changed to cope with late payment, only 4% of the businesses London Economics surveyed said they chased invoices before the payment date, and 6% had introduced or increased an overdue penalty. The most common change, at 15%, was avoiding specific customers because of how they paid.

A worked example for a 20-person firm

Assume a firm invoices £80,000 a month (£960,000 a year) on 30-day terms, its clients pay 20 days late on average, and it covers the gap with an overdraft at 10% a year. These are assumptions, so put in your own figures.

Late money outstanding is £960,000 ÷ 365 = £2,630 of invoices a day, × 20 days = £52,603. London Economics' average for its size class is £52,081.
The overdraft costs £52,603 × 10% = £5,260 a year.
Staff time costs 138 hours × £16.92 = £2,335 a year.
The total is about £7,595 a year.

On the same balance, statutory interest at 11.75% would come to £52,603 × 0.1175 = £6,181 a year, before the fixed sums. Only 6% of the surveyed firms had added or raised an overdue penalty, and a claim can cost a client relationship, so the decision to claim belongs with a person, not a script.

What UK law lets you charge on a late invoice

The Late Payment of Commercial Debts (Interest) Act 1998 lets a business claim interest and a fixed sum when another business pays late. It covers business-to-business sales, not sales to consumers.

The rate is 8% a year over the Bank of England's official dealing rate, which GOV.UK calls the base rate. The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 uses the rate in force on 30 June for interest that starts to run between 1 July and 31 December, and the rate on 31 December for interest that starts between 1 January and 30 June.
Bank Rate was 3.75% on 30 June 2026, so interest that starts to run between 1 July and 31 December 2026 is 11.75% a year. Bank Rate rose to 4% on 5 November 2026. If it is still 4% on 31 December, interest that starts to run from 1 January 2027 will be 12%.
Section 5A of the Act adds a fixed sum per late debt. It is £40 under £1,000, £70 from £1,000 to under £10,000 and £100 from £10,000. A supplier can also claim reasonable recovery costs above that sum.
If no payment date was agreed, GOV.UK says payment is late 30 days after the customer receives the invoice or the goods or service, whichever is later. An agreed date must usually be within 60 days between businesses.
A contract can set its own interest rate. GOV.UK says "You cannot claim statutory interest if there's a different rate of interest in a contract."

A worked example on one invoice

A £5,000 invoice falls due in November 2026 and is paid 45 days late. Interest is £5,000 × 11.75% = £587.50 a year, or £1.61 a day (£587.50 ÷ 365). Over 45 days that is £72.43. The fixed sum for a debt between £1,000 and £9,999.99 is £70, so the claim is £142.43. GOV.UK's own example uses the same method, at £1,000 × 8.5% ÷ 365 = 23p a day.

A chasing schedule that keeps clients onside

Start before the due date, keep the first messages friendly, and put a person on the phone after a week. Xero's UK guide advises a first reminder "on the due date or within a few days after" and a phone call if there's no response within a week.

When	What goes out	Who handles it	Tone
7 days before due	Invoice copy and a payment link	Automated	A friendly heads-up
Due date	Due-today note with the payment link	Automated	Neutral
3 days overdue	First overdue reminder, payment link and statement	Automated	Assumes an oversight
7 days overdue	Phone call	A person	Personal, asks if anything is blocking payment
14 days overdue	Second reminder and statement of account	Automated, paused if the client has replied	Firm
21 days overdue	Final reminder naming the Act, the interest and the fixed sum	Drafted automatically, approved by a person	Formal
30 days overdue	Payment plan, pause work, claim interest or refer to debt recovery	A person decides	Depends on the client

Six rules keep the tone right:

Assume an oversight in the first two messages.
Put the amount, invoice number, due date and a payment link in every message.
Send from a named person, to a reply address someone reads every day.
Stop the sequence as soon as the client replies with a question, a dispute or a promise to pay.
Mention the Act and the interest only when you are ready to claim them.
Thank clients who pay, especially the ones who paid late.

What to automate and what to keep human

Automate anything that repeats on a timer and stops on a fact. Keep with a person anything that needs judgement or carries the relationship.

Automate

Reminders that stop when the money lands. The system checks Stripe's payment record or the bank match in Xero or QuickBooks before every send and cancels the next reminder once the invoice is paid.
Payment links on every invoice and reminder. Stripe charges 1.5% + 20p for a standard UK card and 1% for Bacs Direct Debit, capped at £4, and Payment Links carry no extra fee. On a £2,000 invoice that is £30.20 by card or £4 by Direct Debit.
Monthly statements of account for every client with an open balance.
Sorting replies. An AI step reads answers such as "paid yesterday", "need a PO number" or "we dispute this", pauses the sequence and routes the case to the right person.
A daily debtor list showing who owes what, and how late.
Drafting the interest and fixed-sum figures for a person to approve.

Keep human

Disputes and complaints about the work.
Your largest clients, whose accounts a named person should chase by phone.
Payment plans and clients in difficulty.
Any claim for statutory interest, fixed sums or recovery costs.
Pausing work, debt collection and legal action.

Xero and QuickBooks reminders and their limits

Switch on the reminders your accounting software already has before you build anything. Both Xero and QuickBooks send scheduled email reminders, and neither reads the replies.

Xero sends automatic reminders before or after the due date, and its UK page says "Xero checks your bank feeds so it only chases invoices that are still unpaid." It adds a pay now button, with card payments through Stripe and Direct Debit through GoCardless.
QuickBooks Online UK sends reminders from Settings, Account and settings, Sales. You can create a second and third reminder, up to 90 days before or after the due date, with your own message. Reminders go only to invoices you've already emailed, to customers with an email address. QuickBooks Online Advanced can build reminders as workflows instead.

What neither tool does:

Read the client's reply. A "we dispute this" email still gets the next reminder unless someone switches it off.
Phone anyone.
Chase invoices raised outside the ledger, such as in a job tracker or a CRM.
Stop on a payment it can't see. Xero chases until the invoice shows as paid, so reconcile the bank feed before reminders go out.

For when a layer around the ledger is worth building, see custom invoicing or Xero.

How Yarigai builds an invoice chaser that stops when the money lands

Yarigai builds invoice chasers that stop when the money lands, plus receipts into Xero or QuickBooks and finance dashboards, as part of its AI finance automation work. It builds inside the client's own Xero, QuickBooks and Stripe accounts, and the client owns the code, the data and the accounts from day one.

A person approves anything that sends money, emails a customer or deletes data, so the chaser queues each scheduled reminder for a person to approve before it reaches a client. AI and hosting bills are paid by the client at cost, and the monthly running cost is on the quote.

A project starts with a free 30-minute scope call on Google Meet. A blueprint of about a week, credited to the build, sets out a written plan, a clickable prototype, the monthly running cost, a fixed price and the payback maths. The build takes 2 to 6 weeks, and a single workflow can go live in about two weeks. Yarigai's guarantee reads "If the build isn't profitable for you, we won't build it." If the blueprint maths doesn't come out ahead within the first year, Yarigai doesn't take the job.

For invoices as PDFs with e-signatures and Stripe pay links, Yarigai also sells the source code of Yarigai Docs, which runs on the buyer's own Cloudflare account. Details are on the open source page.

Common questions

Can I charge interest on a late invoice in the UK?

Yes, on business-to-business invoices. The Late Payment of Commercial Debts (Interest) Act 1998 allows interest at 8% a year over Bank Rate, which is 11.75% for interest that starts to run between 1 July and 31 December 2026. If your contract sets a different rate, the contract rate applies instead.

How much compensation can I claim on a late payment?

A fixed sum per invoice under section 5A of the Act. It is £40 for a debt under £1,000, £70 from £1,000 to £9,999.99 and £100 for £10,000 or more. You can also claim reasonable recovery costs above that sum.

When is an invoice legally late if we never agreed payment terms?

GOV.UK says payment is late 30 days after the customer receives the invoice or the goods or service, whichever is later. Agreed terms between businesses must usually be within 60 days.

Will automated reminders annoy my clients?

The biggest risk is a reminder sent after a client has paid or replied, so the system must check for payment and stop on any reply. Xero's UK guide says "most customers pay after a polite prompt", though that is a vendor's view. Keep your largest clients on a named person's phone list.

Can Xero chase overdue invoices automatically?

Yes. Xero sends reminders before or after the due date and checks bank feeds so it only chases unpaid invoices. It does not read replies or pause on a dispute, so a person or a custom layer has to do that.

How many automatic reminders can QuickBooks send?

QuickBooks Online UK lets you set a first, second and third reminder, each up to 90 days before or after the due date. Reminders go only to invoices you have already emailed. QuickBooks Online Advanced can run reminders through workflows instead.

Sources

Checked on or before 7 November 2026. Prices change, so check the live page before you decide.

Late Payment of Commercial Debts (Interest) Act 1998, section 5A, legislation.gov.uk, checked 7 November 2026.
The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4, legislation.gov.uk, checked 7 November 2026.
Late commercial payments: charging interest and debt recovery, GOV.UK, checked 7 November 2026.
Late commercial payments: Interest on late commercial payments, GOV.UK, checked 7 November 2026.
Late commercial payments: Claim debt recovery costs on late payments, GOV.UK, checked 7 November 2026.
Bank Rate history and data, Bank of England, checked 7 November 2026.
Late Payments Research: Estimating the total economic cost of late payments and their impact on the UK economy, London Economics for the Department for Business and Trade and the Office of the Small Business Commissioner, published July 2025.
Small business confidence at risk from April cost rises, Credit Connect, reporting the FSB Small Business Index for Q1 2026, published 7 April 2026.
Invoicing Software for Small Businesses | Xero UK, Xero, checked 7 November 2026.
Outstanding invoices: what they are and how to get paid, Xero UK, published 29 June 2026.
Send invoice reminders automatically or manually in QuickBooks, Intuit QuickBooks UK, checked 7 November 2026.
Pricing & Fees, Stripe, checked 7 November 2026.

Want chasing that stops when you're paid?

Book a free 30-minute scope call. If the build isn't profitable for you, we won't build it.

Work with us