Still Waiting for Customers to Pay? You Can Charge Them for the Delay

Late payment isn't just an annoyance you have to absorb. If you're owed money by another business, the law already gives you the right to charge for the wait.

The Law Behind It

The Late Payment of Commercial Debts (Interest) Act 1998 gives every business a statutory right to interest on overdue business-to-business debts. This applies automatically. You don't need a clause in your contract, and the customer doesn't have to agree.

How Much You Can Charge

Statutory interest: 8% above the Bank of England base rate, calculated daily on the outstanding amount. The reference rate is fixed twice a year, using the base rate in force on 31 December for debts becoming overdue between January and June, and the rate on 30 June for debts overdue between July and December.

Fixed compensation: on top of interest, you can claim a one-off recovery cost for each overdue invoice:

£40 for debts up to £999.99
£70 for debts between £1,000 and £9,999.99
£100 for debts of £10,000 or more

When Interest Starts

Interest typically starts running once payment becomes overdue under your agreed terms. If no payment date is specified, the default is 30 days after delivery of the goods or services, or 30 days after the invoice date, whichever is later.

Check Your Contract First

This is the part people miss. If your contract already contains a "substantial remedy" for late payment, agreed between the parties, that remedy can override the statutory right to interest. Read your terms before assuming the statutory rate applies automatically.

Why It's Worth Doing

Late payment isn't only a chasing exercise. It's a direct hit to your cash flow, and one you're legally entitled to push back on. Even if you don't always charge it, knowing you can changes the conversation with slow-paying customers.

A Quick Word of Caution

This is general information, not legal advice. Whether you can claim, and how much, depends on your specific contract terms and the nature of the debt. Speak to your accountant or a solicitor before pursuing a claim.

Source: GOV.UK — Late commercial payments: charging interest and debt recovery

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