Late payment interest on business invoices, explained

If you supply goods or services to another business and they pay late, you may be able to add statutory interest and a fixed compensation sum to what they owe. This comes from the Late Payment of Commercial Debts (Interest) Act 1998.

Who it covers

The rules apply to business to business contracts in the UK. They do not apply to sales to consumers. If your contract already sets its own late payment interest, that may apply instead.

How much interest

Statutory interest is 8% a year above the Bank of England base rate. It runs each day the invoice stays unpaid after it was due.

The fixed compensation sum

On top of interest, you can claim a fixed sum for each late invoice, based on the amount owed:

• £40 for a debt under £1,000
• £70 for a debt of £1,000 to £9,999.99
• £100 for a debt of £10,000 or more

When an invoice counts as late

If your contract sets a payment date, that applies. If it does not, the usual default is 30 days after the customer received the invoice or the goods or services, whichever is later.

Where to read more

The government guide on late commercial payments sets out the rules. This post is general information, not legal advice about your situation.

How InvoiceCollect helps

InvoiceCollect works out the interest and compensation and writes it into every chase. You can check what you are owed for free, then start a 4 week chase for £49. Your customer pays you directly.