Claiming late payment interest & compensation
If another business pays you late, the law lets you charge interest and add a fixed compensation fee. Most creditors never claim it — here’s how.
Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses have a statutory right to claim interest and reasonable costs when another business pays an invoice late. It applies automatically to most B2B transactions, even if your contract says nothing about it.
How much interest can you charge?
Statutory interest is 8% plus the Bank of England base rate, calculated on the overdue amount for the number of days it’s late. You can charge it from the day after payment was due (or 30 days after delivery/invoice if no date was agreed).
Example: a £10,000 invoice paid 60 days late, with a base rate of 5%, accrues interest at 13% — roughly £214 for that period, on top of the debt itself.
Fixed compensation you can add
You can also claim a fixed sum per overdue invoice to cover recovery costs:
- £40 for debts under £1,000
- £70 for debts of £1,000 up to £9,999.99
- £100 for debts of £10,000 or more
If your reasonable recovery costs exceed the fixed sum (for example, agency or legal fees), you can claim the difference too.
How to claim it
- State the interest and compensation clearly on a follow-up invoice or in your letter before action.
- Keep a simple calculation showing the rate, the period and the daily amount.
- Include it in any court claim or agency instruction so it’s recovered alongside the debt.
Adding statutory interest and compensation can offset much of an agency’s commission — so you keep more of what you’re owed. Get a free case review and we’ll make sure it’s factored in.
This guide is general information, not legal or financial advice. Rates and thresholds can change — check the current base rate before calculating.