Getting paid on time when your client is the NHS or a local authority

Landing a contract with the NHS or a local authority feels like a win. They're reliable, stable clients who aren't going to disappear overnight. But as many UK small businesses and freelancers discover, the reality of getting paid can be a slow, bureaucratic grind. While public sector bodies are bound by prompt payment rules, their complex internal systems often mean your invoices get stuck in a maze of approvals and processing queues. This guide breaks down why these delays happen and provides a practical, step-by-step process for getting your public sector invoices paid on time.

Why Public Sector Payments Are Slower Than You'd Expect

On paper, the public sector should be your best-paying client. The UK government, through the Prompt Payment Code and the Public Contracts Regulations 2015, mandates that central government departments and their agencies pay 95% of undisputed invoices within 30 days. For their supply chains, they are expected to pay within 60 days.

However, the path from submitting your invoice to the money landing in your bank account is often fraught with internal hurdles that have nothing to do with your work.

The Bureaucratic Maze

Unlike a small business where the owner might approve and pay an invoice in one go, a public sector body has a multi-layered, siloed process:

1. The Commissioning Manager: This is your day-to-day contact, the person who requested your services. They need to internally confirm that the work was completed to standard.
2. The Departmental Budget Holder: A more senior manager must then approve the expenditure against their budget code.
3. The Central Accounts Payable (AP) Team: This is a separate finance department, often in a different building or city. They receive the approved invoice and add it to a payment queue. They have no personal relationship with you and no knowledge of the work you did. Their job is purely to process what's put in front of them.

A delay at any one of these stages brings the entire process to a halt, and the person at one stage often has no visibility or influence over the others.

The Purchase Order is King

The single most common reason for payment failure is a missing or incorrect Purchase Order (PO) number. A PO is an official document issued by the buyer committing to pay for specific goods or services. For the AP team, an invoice without a matching PO number is just an unsolicited piece of paper. It won't even enter their system, as there's no approved budget for it to be paid against.

Batch Payment Runs

Most large organisations, including councils and NHS Trusts, don't make individual payments as invoices come in. They run payments in large batches on specific days—for example, the last working Friday of the month. If your invoice gets final approval the day after a payment run, you won't get paid for another 30 days, even if it was due two weeks earlier.

Before You Invoice: Setting Yourself Up for Success

The most effective credit control happens before you even issue the invoice. Getting your administrative ducks in a row is non-negotiable when dealing with the public sector.

1. Secure the Purchase Order (PO) Number

Do not start any work or deliver any goods until you have an official PO number from your client contact. If they are vague about it, be polite but firm. Explain that your accounts department requires it for invoicing. An email saying "Yes, the PO is on its way" is not a PO. You need the actual number. Once you have it, save the email or document it came in. This is your proof.

2. Identify Your Key Contacts

You need two critical pieces of contact information before you invoice:

• Your Day-to-Day Contact: The person who commissioned the work. You'll need their name and email to resolve any disputes about the work itself.
• The Accounts Payable (AP) Email Address: This is the most important one. Ask your contact, "What is the correct email address for submitting invoices to your finance team?" It is almost always a generic inbox like invoices@council.gov.uk or apinvoices@nhstrust.nhs.uk. Sending your invoice only to your day-to-day contact is a recipe for disaster; they may forget to forward it, be on holiday, or send it to the wrong place.

3. Confirm the Exact Invoicing Details

During the onboarding process, ask for the following and get it in writing:

• Correct Legal Entity: Is your contract with "NHS England," a specific Clinical Commissioning Group (CCG), or an individual NHS Trust? For a council, is it "Birmingham City Council" or a specific department operating under a different name? Invoicing the wrong entity will cause an automatic rejection.
• Invoice Submission Portal: Some public bodies use third-party procurement portals like Tradeshift, Coupa, or Basware. If they do, you must upload your invoices there. Emailing it won't work. Clarify if this is required.
• Payment Terms: While the legal default for public contracts is 30 days, confirm what their standard terms are. Don't assume.

4. Perfect Your Invoice Format

Your invoice must be crystal clear and contain all the information the AP processor needs. Any ambiguity gives them a reason to reject it.

• PO Number: Display it prominently at the top of the invoice. Label it clearly: "Purchase Order Number:" or "PO Ref:".
• Invoice Date & Number: Use a unique, sequential invoice number.
• Your Company Details: Your registered name, address, and bank details for payment.
• Their Company Details: The full, correct legal entity name and address you confirmed earlier.
• Breakdown of Services: A clear description of the work done or goods supplied, matching the description on the PO.
• VAT: If you are VAT registered, show the net amount, the VAT amount, and the gross total separately, along with your VAT number.

The Chasing Process: A Step-by-Step Guide

Even with perfect preparation, you may still need to chase. Follow a structured, escalating process.

Step 1: The Pre-Emptive Nudge (3-5 Days Before Due Date)

This is a friendly, professional courtesy reminder. It helps catch any issues before the invoice becomes overdue.

Email to: The main AP email address, CC'ing your day-to-day contact. Subject: Courtesy Reminder: Invoice [Invoice Number] due on [Due Date]

Dear Accounts Payable,

I hope you are well.

This is just a friendly reminder that invoice [Invoice Number] for £[Amount] is due for payment on [Due Date]. A copy is attached for your convenience.

Please do let us know if you require any further information to process this for payment.

Kind regards,

[Your Name]

Step 2: The Day It Becomes Overdue

The tone is still polite but now firmer. You are stating a fact: the payment is now late.

Email to: The main AP email address, CC'ing your day-to-day contact. Subject: Overdue Invoice Reminder: Invoice [Invoice Number]

Dear Accounts Payable,

Following up on my previous email, invoice [Invoice Number] for £[Amount] was due for payment yesterday, [Due Date], and is now overdue.

Could you please provide an update on when we can expect to receive payment? A copy of the invoice is attached again for your reference.

Kind regards,

[Your Name]

Step 3: 7-14 Days Overdue

Now is the time to escalate and involve your day-to-day contact more directly. They are often your best advocate for chasing internally.

Email to: Your day-to-day contact, CC'ing the AP email address. Subject: Urgent: Payment Overdue for Invoice [Invoice Number] - 14 Days Late

Hi [Contact's Name],

I hope you are well.

I am writing as we have not yet received payment for invoice [Invoice Number], which is now 14 days overdue.

I have contacted the Accounts Payable team but have not had a response. Could you possibly look into this from your end to see what is causing the delay? The work was completed and signed off on [Date].

The invoice details are: Invoice Number: [Invoice Number] PO Number: [PO Number] Amount: £[Amount] Due Date: [Due Date]

I have attached the invoice again. We would be grateful if you could help us resolve this.

Kind regards,

[Your Name]

This multi-step chasing process can be time-consuming. Tools like InvoiceReminder can help by automating the email sequence, sending scheduled reminders that escalate from a friendly nudge to a final notice, freeing you up to focus on the work itself.

Step 4: 30+ Days Overdue - Formal Action and Statutory Rights

If emails and phone calls yield no results, it's time to formalise the process and exercise your legal rights under UK law. The Late Payment of Commercial Debts (Interest) Act 1998 applies to public sector bodies just as it does to any other commercial customer.

This Act allows you to claim:

1. Statutory Interest: This is currently 8% plus the Bank of England base rate. This is calculated daily.
2. Fixed Compensation: A one-off sum for each late invoice to cover the cost of chasing.

The compensation amount depends on the size of the invoice (excluding VAT).

Invoice Value (excl. VAT)	Fixed Compensation Owed
Up to £999.99	£40
£1,000 to £9,999.99	£70
£10,000 or more	£100

To calculate the annual interest rate, you take the current Bank of England base rate (which you can find on the Bank of England's website) and add 8%. For example, if the base rate is 5.25%, the statutory rate is 13.25%.

Daily Interest = (Invoice Total incl. VAT) x (Statutory Interest Rate %) / 365

Send a formal letter or email titled "Letter Before Action" outlining your claim. This often gets an immediate response.

Navigating Common Public Sector Excuses

When you finally get someone on the phone, you may hear one of several common refrains. Here’s how to respond.

• "We don't have the PO number on the invoice."

  • Your Response: "The Purchase Order number is [PO Number], and it is displayed at the top right of the invoice. This was provided by [Contact Name] in an email on [Date]." (This is why documenting everything is vital).

• "It hasn't been approved by the manager yet."

  • Your Response: "Thank you for letting me know. My contact, [Contact Name], confirmed the work was completed satisfactorily on [Date]. Could you tell me the name of the manager who needs to approve it so I can ensure they have all the information they need?"

• "We've missed the monthly payment run."

  • Your Response: "I understand. As the invoice is now [Number] days overdue, this delay is becoming critical for our cash flow. Can you confirm the invoice is fully approved and queued for the next run on [Date]? Given the delay is internal, is it possible to arrange an ad-hoc BACS payment this week?"

• "You're not set up as a supplier on our system."

  • Your Response: "We submitted our new supplier setup forms to [Email Address/Department] on [Date]. Could you please check the status of that application and let me know if any further information is required from our side to expedite it?"

The Nuclear Option: The Public Contracts Regulations 2015

If you have an undisputed invoice that remains unpaid after 30 days and all other avenues have failed, you have a powerful tool at your disposal. The Public Contracts Regulations 2015 make it a legal requirement for public authorities to pay invoices within 30 days. This isn't just a target; it's the law.

You can also report the paying authority to the government's Public Procurement Review Service. This service investigates cases of poor procurement practice, including persistent late payment by public bodies. A complaint can trigger an investigation and put significant pressure on the authority to resolve the issue and improve its processes. This is a serious step and should be used as a last resort, but it is an effective one.

Frequently asked questions

Can I charge interest on a late NHS invoice?

Yes, absolutely. The Late Payment of Commercial Debts (Interest) Act 1998 applies to public sector bodies, including NHS Trusts and local authorities. For any commercial invoice that is paid late, you are entitled to claim statutory interest (the Bank of England's base rate plus 8%) as well as a fixed compensation sum of £40, £70, or £100 depending on the invoice value.

What is the single biggest mistake to avoid when invoicing a local council?

Failing to get an official Purchase Order (PO) number before you start any work. An invoice submitted to a public body without a valid PO number is almost guaranteed to be rejected by their finance system. It’s the key that unlocks the payment process.

Are public sector payment terms always 30 days?

The Public Contracts Regulations 2015 set a legal requirement for public bodies to pay undisputed invoices within 30 days. This is the default. While a contract could theoretically specify longer terms (e.g., 60 days), the 30-day rule is the legal standard for public procurement, and government bodies are heavily pushed to adhere to it.

Who should I send my invoice to? My contact or a central finance department?

Always send the invoice directly to the official Accounts Payable (AP) or finance email address that the organisation provides. It is also good practice to copy in (CC) your day-to-day contact so they are aware the invoice has been submitted and can help chase from their side if it gets stuck. Do not rely on your contact to forward the invoice for you.

My invoice was for less than £1,000. Is it worth chasing for the £40 compensation?

Often, yes. The act of sending a formal notice claiming the fixed £40 compensation and statutory interest is a powerful signal. It demonstrates that you are serious, professional, and aware of your rights. More often than not, this formal step is enough to get the original, larger invoice paid immediately. Think of it less as a way to make £40 and more as an effective tool to unlock the overdue payment.

What if they dispute the invoice?

If a client raises a genuine dispute about the invoice—for example, they are not happy with the work delivered—the 30-day payment clock is paused. You cannot charge late payment interest on a genuinely disputed amount until the dispute is resolved. You must engage with them immediately to understand the problem, resolve it, and if necessary, issue a credit note and a revised invoice. Get any agreement on a resolution in writing.

Automate your invoice chasing

Chasing invoices, whether from a small business or a large public body, is a drain on your time. InvoiceReminder is built for UK freelancers, small businesses, and accountants to put this process on autopilot. It connects with Xero, Sage, QuickBooks, and FreeAgent to send customised, scheduled email reminders for your overdue invoices. The system can follow your escalation rules, from a friendly nudge to a final notice, helping you get paid faster without the manual follow-up. You can get started with unlimited email reminders at no cost right now on the Free plan, with no card required. InvoiceReminder is built by the team behind WeCovr, which has arranged over 1,000,000 insurance policies in the UK and is authorised and regulated by the Financial Conduct Authority.