Free late payment invoice
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INVOICE
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You have a statutory right to charge interest
Under the Late Payment of Commercial Debts (Interest) Act 1998, if you are supplying another business you can charge interest on overdue invoices without it being written into your contract. The right exists automatically.
The rate is 8% above the Bank of England base rate, calculated daily from the day after payment was due.
And fixed compensation on top
As well as interest, you can claim a fixed sum per overdue invoice, based on the size of the debt:
- £40 for debts under £1,000
- £70 for debts of £1,000 to £9,999.99
- £100 for debts of £10,000 or more
If your reasonable costs of recovering the debt exceed that fixed sum — for example if you instruct a solicitor — you can claim the difference as well.
When payment becomes late
If you agreed payment terms, the debt is late the day after those terms expire. If you agreed nothing, the default is 30 days from whichever is later: the date the customer received the invoice, or the date you delivered the goods or service.
Contract terms longer than 60 days between businesses are only enforceable if they are not grossly unfair to the supplier. A customer imposing 120-day terms may not be on as firm ground as they think.
Using it without losing the client
Most suppliers never invoke this, fearing it damages the relationship. In practice the useful move is to state the right on the invoice from the start — a line reading that late payment may incur statutory interest under the 1998 Act changes behaviour long before you ever have to charge it.
If you do decide to charge, send a fresh invoice for the interest and compensation rather than adding it to the original. It keeps your records clean and makes the claim easier to evidence if it ever escalates.
Common questions
Can I charge interest on a late invoice in the UK?
Yes. Between businesses, the Late Payment of Commercial Debts (Interest) Act 1998 gives you an automatic right to charge 8% above the Bank of England base rate, whether or not your contract mentions it.
How much compensation can I claim for a late invoice?
£40 for debts under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more — per invoice, in addition to interest.
When is an invoice legally late?
The day after your agreed payment terms expire. With no agreed terms, 30 days from the later of the customer receiving the invoice or you delivering the work.
Does this apply to consumers?
No. The statutory interest right applies to business-to-business transactions. Different rules apply to consumer debts.