When a business client pays late, UK law lets you charge statutory interest and a fixed compensation on top of the invoice. Here’s what you’re owed, and how Sendinvo works it out and drafts the invoice for you.
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If you run a UK business and another business pays you late, the Late Payment of Commercial Debts (Interest) Act 1998 is on your side. It entitles you to charge interest on the overdue amount, plus a fixed sum to cover the cost of chasing it. It covers business-to-business invoices, not sales to consumers.
You can charge the Bank of England base rate plus 8% a year. It’s simple interest on the amount still owed, and it runs from the day after payment was due right up until the invoice is paid. So a debt that’s twice as old, or twice as large, is owed twice the interest.
On top of the interest, the Act lets you add a fixed sum for the trouble of a late payment, set by the size of the debt:
You don’t have to charge any of this, and many people waive it for a good client. But it’s yours to claim, and knowing the figure changes the conversation. This page is general information, not legal advice.
Working this out by hand means counting days, applying a rate, and finding the right compensation band. Sendinvo does it the moment an invoice goes overdue.
Open an overdue sterling invoice in Sendinvo and you’ll see the statutory interest accrued so far, updated to today, alongside the fixed compensation for that debt’s size. It’s there to help you decide whether to charge it; it isn’t printed on the original invoice.
Decide to charge it and one click drafts a separate invoice to the same client, with two lines, the interest and the compensation, referencing the original invoice number. It’s a fresh draft you review and send. Your original invoice is never touched.
The Bank of England base rate is a setting you keep in step yourself, not a live feed, so the figure Sendinvo uses is always one you’ve chosen. Update it in settings whenever the base rate moves.
Figures update to today’s date, using the base rate you’ve set.
Yes. When another business pays you late, the Late Payment of Commercial Debts (Interest) Act 1998 entitles you to statutory interest plus a fixed compensation sum, on top of the amount owed. It applies to business-to-business invoices, not to consumers. This is general information, not legal advice.
Statutory interest is the Bank of England base rate plus 8% a year. It’s simple interest on the amount still owed, running from the day after payment was due until it’s paid.
On top of interest, the Act allows a fixed sum by debt size: £40 for a debt under £1,000, £70 for £1,000 up to £10,000, and £100 for £10,000 or more.
No. The base rate is a setting you keep in step with the Bank of England yourself, not a live feed. Sendinvo uses whatever rate you’ve set to work out the interest, so you stay in control of the figure.
No. On an overdue sterling invoice, Sendinvo shows the interest accrued so far and the compensation due, and one click drafts a separate interest invoice to the same client. It’s a fresh draft you review and send; your original invoice is left exactly as it went out.
Let Sendinvo work out the interest and compensation you’re owed, and draft the invoice in a click.