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Under the Late Payment of Commercial Debts Act you can charge statutory interest at base rate + 8%, plus fixed compensation (£40 / £70 / £100 by invoice size).
How late payment drains cash
Every unpaid invoice is cash locked outside the business. Rising debtor days mean you are effectively lending to your customers — funding their operations from your own working capital. A run of late payers can leave a profitable company unable to pay its own suppliers on time.
Your right to charge interest
Under the Late Payment of Commercial Debts legislation, you can charge statutory interest on overdue business invoices — 8% above the Bank of England base rate — plus a fixed compensation (from £40) per late invoice, and reasonable recovery costs. Use the calculator below to work out what a late payer owes you.
Practical credit control
Prevention beats interest. Agree clear payment terms up front, invoice promptly and accurately, and chase the moment an invoice is overdue — a polite reminder on day one of lateness is far more effective than a stern letter a month later. Consistent, early follow-up trains customers to pay you first. See how to chase overdue invoices.
Bridging the gap invoices leave
When cash is tied up in good invoices you cannot collect fast enough, invoice finance or a short working-capital facility releases the value now and is repaid as customers pay. It converts an unpaid invoice into usable cash without discounting or damaging the relationship.
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
Make late payment rare
Tighten terms, automate reminders, and reserve interest for persistent offenders. Run the numbers with the late payment interest calculator.
Frequently asked questions
Can I really charge interest on a late invoice?
Yes. UK law entitles businesses to statutory interest of 8% above base rate on overdue commercial debts, plus fixed compensation and reasonable recovery costs. Many businesses under-use this right.
Will charging interest damage the relationship?
Used judiciously it need not. Many businesses set out the right in their terms as a deterrent and only apply it to persistent late payers, which often improves payment behaviour.
How does finance help with late payment?
Invoice finance or a short facility releases cash tied up in unpaid invoices, so late payment stops choking your own cash flow. You get paid now and repay as customers settle.
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