Charging interest on late invoices
If a business or public body pays you late, the Late Payment of Commercial Debts law lets you claim statutory interest and a fixed sum for the cost of chasing. It applies to business-to-business and public sector invoices, but not to consumers.
How the interest works
Statutory interest is 8 per cent a year above the Bank of England base rate. The rate used is the one in force on 30 June or 31 December before the payment became overdue, so enter that rate in the calculator. Interest runs from the day after the payment was due.
The fixed compensation
You can also claim a fixed sum per overdue invoice: £40 if the debt is under £1,000, £70 if it is £1,000 to £9,999.99, and £100 if it is £10,000 or more.
Practical steps
Keep your invoice, the agreed terms and your reminders. Send a polite reminder first, then a firmer letter that includes the interest and fixed sum, before you consider formal recovery. If your contract sets its own interest rate, different rules can apply, so check with an adviser for larger debts.
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