Charging Late Payment Fees as a Gas Engineer or Plumber: How, When, and Why
If you run a heating and plumbing business as a living, you already know the worst part of the job isn’t the work — it’s the paperwork, admin, and of course chasing for the money you’re owed.
We’ve written an in-depth piece on how late payments hurt heating & plumbing businesses, and Gas Engineer Software offers a completely automated payment reminder system that gets businesses paid 64% faster on average.
But when less than half of invoices are paid 2 weeks after being issued, late fees become a serious question.
In this blog, we’ll discuss whether you should be charging late fees in the first place, what you’re legally allowed to charge, and how you can communicate them to your customers (with some free email templates)
Why it’s important you get paid on time
When the invoice is still sitting there unpaid weeks later, your business pays the price.
Poor cashflow means any new tools, hires, or business investments you wanted to make might have to be postponed, while a quarter of tradespeople have reported not being able to take a holiday in the past 2 years because of money tied up in unpaid invoices.
Then, you’ve got to consider all the extra time spent chasing up customers to pay their invoices.
Quick tip: Setting a shorter payment window like 7-14 days can incentivise faster payments.
The pros and cons of late fees
Late fees can be controversial. While some view them as too strict for domestic customers, they can be a good deterrent.
Pros
- Late fees encourage timely payments. Many will be incentivised to simply get the payment out of the way as soon as possible.
- You get extra compensation for late payments. If someone does pay late, at least you’re earning a little extra from the delay.
- It makes your business look more professional, as long as the late payment policies are fair and reasonable.
Cons
- Late fees can upset customers. It could be a good idea to waive late fees under special circumstances to preserve relationships.
- Administrative work involved. Charging late fees means another step in your admin work to handle (unless you’ve got software to help).
The invoice reminder editor in Gas Engineer Software with drag-and-drop personalisation tags. You can customise your payment reminders to mention your late fee policy, alongside adding it to your invoice payment terms.
Is it legal to charge late fees? How much can I charge?
It is completely legal in the UK to charge late fees on your invoice.
However, how you charge depends on who the customer is:
Commercial / business customers (B2B): You have a statutory right to charge late payment interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998 — you don’t even need it in your contract. That’s 8% plus the Bank of England base rate in interest, plus fixed compensation:
| Debt size | Fixed compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 – £9,999.99 | £70 |
| £10,000 or more | £100 |
Domestic customers (B2C): The statutory act doesn’t apply. You can still charge a late fee, but only if it’s written into the terms the customer agreed to before the work started, and it has to be a genuine, reasonable reflection of your costs, and not a penalty. That’s why getting your payment terms on the quote and invoice matters (see below).
For domestic jobs, a flat £10–£30 is typical late fee.
This is general guidance, not legal advice — if you’re unsure, get your terms checked.
Late fee vs reminder charge vs chasing the invoice
- Chasing an unpaid invoice is just following up — a polite nudge, no charge attached. It should always be your first move.
- A reminder / notice charge is a small admin fee (often £5–£15) some tradespeople add to cover the time and cost of sending formal reminders.
- A late payment fee is the bigger charge (flat fee or interest) that kicks in once an invoice is genuinely overdue.
Adding late fees to invoices
You need to let your domestic customers know beforehand if you plan to charge late fees. This can simply mean including a well-written and clearly thought out policy on your invoices.
Make sure this policy:
- Is clearly legible
- Explains how much you will charge, and how charges are calculated
- Details when the late fee kicks in
- Includes information about payment reminders
- Lists exceptions (if any)
Adding your late fee policy to your quotes and invoices is easy through the payment terms settings in GES. Add it once, and it’ll be inlcuded on every invoice or quote.
Late fee best practises:
- Lay out your terms and conditions clearly on your invoice. Your customers need to know you have a late payment fee, if you decide to do so.
- Make at least one effort to contact your customer to remind them of the payment before any late payment fees kick in. This will help preserve good will and your customer relationships.
- Your late fees should be high enough to work as a deterrent, but not so high they’re unfair.
- Find a time window that is both fair and impactful in terms of reducing the number of late payments.
- Be ready to waive late payment fees whenever you feel it fair to do so. Late payment fees shouldn’t be about earning a bit of extra cash for your business anyway. Rather, they’re about encouraging on-time payments.
Late fee email reminder templates
Subject: Quick reminder — invoice [#] for [job address] Hi [Name], Hope the [boiler / heating / bathroom] is running well since we finished up. Just a quick reminder that invoice [#] for £[amount] was due on [date] and is still showing as outstanding. If it's already on its way, please ignore this. If anything's holding it up — or you'd like to sort a payment plan — just reply and we'll work something out. You can pay online here: [payment link] Cheers, [Your name]
Subject: Invoice [#] now overdue — late fee applied Hi [Name], Invoice [#] for £[amount] was due on [date] and remains unpaid, so as set out in the terms you agreed, a late fee of £[fee] has now been added — bringing the total to £[new total]. I'd much rather sort this than charge fees, so if there's a problem, get in touch today and we'll find a way forward. Otherwise you can settle up here: [payment link] Thanks, [Your name]