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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).
Step 1 — confirm the debt qualifies
The Late Payment of Commercial Debts (Interest) Act 1998 covers business-to-business invoices where no substantial contractual remedy applies. Confirm the invoice is genuinely overdue against the agreed or default payment terms.
Step 2 — work out the statutory interest
Charge the Bank of England base rate plus 8% on the overdue amount, accruing daily from the day after payment was due. Calculate it with the late payment interest calculator.
Step 3 — add the fixed recovery fee
You can also claim a fixed sum per invoice: £40 for debts under £1,000, £70 for £1,000–£9,999.99, and £100 for £10,000 or more — plus reasonable recovery costs above that.
Step 4 — issue a clear demand
Send a statement showing the principal, the statutory interest to date, the fixed fee and the daily rate going forward. Clarity often prompts payment on its own.
Step 5 — decide whether to enforce
You may choose to waive interest to preserve a relationship, or enforce to protect cash flow. Either way, knowing your entitlement strengthens your hand.
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Frequently asked questions
What interest can I charge on a late invoice?
Statutory interest of the Bank of England base rate plus 8%, accruing daily from the day after the due date, plus a fixed recovery fee of £40 to £100 per invoice.
Do I have to charge it?
No. It is your right, not an obligation. Many businesses reserve it as leverage and waive it for good customers, but charging it protects your cash flow.
Can my contract override the statutory rate?
Only if it provides a substantial alternative remedy. A term that simply removes the right to interest without a real substitute is not enforceable.
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