Late invoice payments: how to chase, claim interest and get paid
In short
UK suppliers can claim statutory interest of 8% above base rate plus £40, £70 or £100 per late invoice. Start chasing before the due date, state the charges in writing, and escalate on a fixed schedule.
- UK suppliers can charge statutory interest of 8% above base rate on late business payments, plus £40, £70 or £100 per invoice.
- Interest is simple, calculated on the VAT-inclusive debt from the day after the due date.
- A chase sequence that starts before the due date catches most problems before they become late payments.
- Stating the interest and compensation in writing, with a date and an amount, gives your reminders weight.
- Weekly ageing reports show which customers need different terms rather than more reminders.
UK suppliers do not have to absorb late payment. This guide sets out the statutory interest and fixed compensation you can claim, and a staged chase sequence that starts before the due date.
When an invoice is paid late, a UK business can charge statutory interest at 8% above the Bank of England base rate, plus a fixed sum of £40, £70 or £100 per invoice, under the Late Payment of Commercial Debts (Interest) Act 1998. The steps, in order: confirm the payment terms, remind the customer before the due date, chase on the day it falls overdue, state the interest and compensation you will claim, send a formal letter, then start a court claim if nothing arrives. Doing this on a schedule recovers cash faster than sending a reminder once an invoice is weeks late.
What the law lets you charge
The Act applies to business-to-business debts and to debts owed by public authorities. According to GOV.UK, statutory interest is 8% plus the Bank of England base rate, and you cannot claim it if your contract sets a different rate of interest. That rule has one limit: you cannot use a lower rate with public authorities.
If you have agreed a payment date, GOV.UK says it must usually fall within 60 days for business transactions and 30 days for public authorities. Longer business terms are possible but must be fair to both sides. If no date was agreed, the payment is late 30 days after the customer receives the invoice or after you deliver the goods or service, whichever is later.
On top of interest, you can charge a fixed sum for the cost of recovery, once per payment. GOV.UK sets it by debt size: £40 up to £999.99, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more. As a supplier you can also claim reasonable costs each time you try to recover the debt.
Check the current rate
The base rate used is the one in force on 30 June or 31 December, depending on when the debt became overdue. Alto Accounting puts the 2026 rate at 11.75%, which is 3.75% plus 8 points. Confirm the figure on the day you calculate.
Work out what an overdue invoice is really owed
Interest is simple, not compound. Multiply the invoice value by the annual rate, divide by 365 for a daily figure, then multiply by the days overdue. Alto Accounting notes the debt is the VAT-inclusive amount, and that no VAT applies to the interest or the fixed compensation themselves.
A worked example: a £6,000 invoice including VAT, 30 days overdue, at 11.75%. Annual interest is £705, daily interest is about £1.93, and 30 days comes to roughly £58. Add £70 compensation and you can ask for about £128 on top of the invoice. The sum is modest, but it changes the conversation. GOV.UK also advises sending a new invoice if you decide to add interest to the money you are owed.
The staged chase sequence
Ad hoc reminders fail because nobody owns the timing. A fixed sequence removes the judgment call about whether it is "too early" to chase, and a customer who has been reminded politely three times is rarely surprised by the fourth message.
Put the terms in writing before you start work
State the payment date, the agreed terms and your late payment position on the quote, order confirmation and invoice. If you want a contractual interest rate, agree it here, because a contractual rate replaces the statutory one. If you want the statutory rate, say so. Customers rarely argue with terms they saw at the outset.
Send the invoice to the right person with a clear due date
Address it to the person who approves payment, not just a general inbox, and include the purchase order number if the customer uses one. Show the due date as a calendar date rather than "30 days". Many late payments are really invoices that never reached the approver.
Send a friendly reminder before the due date
About five to seven days before the due date, send a short message confirming the invoice arrived, the amount and the date. Ask whether anything is holding it up. This is the step ad hoc chasers skip, and it catches queries about missing purchase order numbers or wrong addresses while there is still time to fix them.
Chase on the first day it is overdue
Contact the customer the day after the due date, by email and, for larger sums, by phone. Ask for a payment date and write down what they promise. Keep the tone neutral. At this point you are checking for a problem, not accusing anyone.
Tell the customer what late payment will now cost
Around a week after the due date, write to say the invoice is overdue and that you will claim statutory interest and the fixed compensation under the 1998 Act if it is not paid by a stated date. Include the calculated figures. Giving a specific date and a specific amount tends to move an invoice up the payment run.
Send a formal letter and escalate to a named senior contact
If the date passes, send a formal letter before action by recorded delivery and email. Set out the invoice, the interest to date, the compensation, any reasonable recovery costs and a final deadline, commonly 14 days. Copy a director or finance lead at the customer, and keep a dated record of every contact.
Issue the interest invoice and consider a court claim
Send a new invoice for interest and compensation, as GOV.UK advises. If the debt is still unpaid after the deadline, you can apply to a county court for the money. GOV.UK notes that a different process applies in Scotland and Northern Ireland. Many customers pay or agree a plan once a claim is a real possibility.
Protecting the relationship while you chase
The thesis of this sequence is that firmness early is kinder than firmness late. A customer who gets a friendly reminder before the due date and a neutral check the day after sees a supplier with a process. A customer who hears nothing for six weeks and then receives a demand sees a supplier who has just lost patience.
Use judgment on interest. Many suppliers do not claim it on every invoice, and that is a legitimate choice for a good customer who is a few days late. The right to claim is what gives your reminders weight, and you can waive the charge as a goodwill gesture once the money arrives. Do record that you waived it, so the pattern is visible.
Do not threaten what you will not do
Stating interest and compensation in a letter and then never invoicing it teaches customers that your deadlines are soft. Only name charges you are prepared to raise.
Automate the sequence and watch the ageing
A sequence only works if it runs every time. Software for credit control gives you an overdue list with each customer's status, so the next action is never a guess. Zigaflow's credit control tools do this, and your invoices keep the due dates, purchase order references and payment history in one place. You can also use automations to trigger the pre-due reminder and the overdue notices without anyone remembering, and a spreadsheet can do the same job if you are disciplined.
Finally, measure it. A reporting view of overdue balances by age band, with average days to pay for each customer, shows who needs earlier reminders and who needs different terms. Review it weekly. If one customer is paying late on every invoice, the fix is usually in the terms, a deposit or a credit limit, not another reminder.
Common questions
Sources
- Late commercial payments: charging interest and debt recoveryGOV.UK · accessed 2026-11-05
- Late commercial payments: when a payment becomes lateGOV.UK · accessed 2026-11-05
- Claim debt recovery costs on late paymentsGOV.UK · accessed 2026-11-05
- UK Late Payment Interest Rate 2026: 11.75% ExplainedAlto Accounting · accessed 2026-11-05
- Make a court claim for moneyGOV.UK · accessed 2026-11-05