Every late business invoice in the UK carries interest and compensation by law. You do not need it written into your terms, and most businesses never claim a penny of it.
If another business pays you late, the law already gives you three things: interest, a fixed sum of compensation, and your reasonable costs of chasing the money. You do not have to have written any of it into your contract. It applies automatically to commercial transactions.
Almost nobody claims it. Invoices get paid eventually, the relationship matters, and adding interest feels like picking a fight. That is understandable, but it means a real entitlement quietly goes unused, and it removes any cost to the debtor of paying you last.
If you agreed a payment date, the invoice is late the day after it. If you did not agree one, payment becomes late 30 days after the customer receives the invoice, or 30 days after you delivered the goods or service, whichever is later.
Agreed terms have limits. For business to business transactions the default period is up to 60 days, and for public authorities it is 30 days.
Statutory interest on a late commercial debt is 8% plus the Bank of England base rate.
The base rate is currently 3.75%, held at the Monetary Policy Committee meeting on 16 September 2026. That puts statutory interest at 11.75% a year. If the debt is older, check the base rate that applied at the time, because the figure moves with it.
On a £10,000 invoice at 11.75%, that is roughly £32 a week. Six months late and you are owed around £580 in interest on top of the invoice.
Separately from interest, you can charge a fixed sum for each late payment. The amount depends on the size of the debt:
These amounts are set by the late payment legislation and cannot be negotiated up or down. You can charge the fixed sum once per late payment.
Worth knowing: the fixed sum is a floor, not a ceiling. If your reasonable costs of recovering the debt come to more than £40, £70 or £100, you can claim those reasonable costs as well, each time you try to recover it.
This matters more than the interest for most creditors. It is the provision that lets the cost of pursuing a debt sit where it belongs, with the debtor who caused it, rather than being deducted from what you are owed.
A business that pays its suppliers late is making a decision about who to pay first. If you are the only supplier whose invoice grows every week it goes unpaid, and who charges the cost of chasing back to them, you stop being the easy one to leave until last.
You do not have to claim it on every invoice. Knowing it is there, and saying so, is often enough.
The usual objection is that claiming interest damages the relationship. Sometimes it does. But a customer who is 90 days late and still trading is not protecting the relationship either, and the ones who take offence at being asked to pay on time are rarely the customers worth keeping.
A reasonable middle ground is to make the entitlement visible on the invoice and reserve the right to claim it, then decide case by case whether to.
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