The work was finished weeks ago and the letting agent’s payment run keeps slipping. On a sterling invoice to another business you can charge interest from the day after it was due, plus a fixed sum on top. Sendinvo works out both and drafts the invoice for you to read before it goes.
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Harbour Lettings Ltd
Invoice INV-0231
When 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 what’s still outstanding, plus a fixed sum towards the cost of chasing it. It applies to invoices you raise for another business, so a letting agent, a landlord’s company, a shop, or a main contractor, but not a homeowner.
You can charge the Bank of England base rate plus 8% a year, at the base rate on the last 30 June or 31 December before the payment ran late. It’s simple interest on the amount still owed each day, and it runs from the day after payment was due right up until the money lands. An invoice twice the size, or twice as long overdue, is owed twice the interest.
On top of the interest, the Act lets you add a fixed sum, set by the size of the debt:
You don’t have to charge any of it, and plenty of trades waive it for a client they want the next job from. But it’s yours to claim, and knowing the figure changes how the phone call goes. This page is general information, not legal advice.
Doing this on the van seat means counting days, applying a rate, and finding the right compensation band. Sendinvo does it the moment the invoice goes overdue.
Open an overdue sterling invoice and Sendinvo shows the days it has run over, the rate, the interest to today, and the fixed sum for a debt that size. The interest runs on what was outstanding each day, so a part payment from the client brings it down from the day it arrives, and on a CIS invoice to a main contractor it runs on the net due after the deduction. None of it appears on the invoice you already sent.
Decide to charge it and one click drafts a separate invoice to the same client: one line for the interest, naming the invoice and the days it ran over, one line for the compensation, and 14 days to pay. An invoice paid in stages gets a line for each stage that ran late. It’s a draft, so you read it before it goes. The invoice the client already has is never touched.
The rate isn’t today’s base rate. The law fixes it for each debt, at the base rate on the last 30 June or 31 December before the payment ran late, and it doesn’t move after that. Sendinvo keeps the Bank of England’s record of every change, so it uses the right rate for each invoice, and for each stage of one paid in stages, without you looking anything up.
Figures update to today’s date, at the rate the law fixes for the invoice.
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 what you’re owed. It applies to invoices you raise for another business, so a letting agent, a shop, or a main contractor, not a homeowner. This is general information, not legal advice.
Statutory interest is the Bank of England base rate plus 8% a year, at the base rate on the last 30 June or 31 December before the payment ran late. It’s simple interest on what’s still outstanding each day, running from the day after payment was due until the money lands. On a £6,400.00 invoice with the base rate at 4%, that’s £2.10 a day.
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.
Yes. The law fixes each debt’s rate at the base rate on the last 30 June or 31 December before it ran late, and it stays at that for as long as the debt runs. Sendinvo keeps the Bank of England’s own record of every change, so each invoice, and each stage of one paid in stages, is worked out at the right rate.
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 read before it goes; the invoice the client already has is left exactly as it went out.
Interest runs on what’s still outstanding, so on a CIS invoice that’s the net amount due after the deduction, not the gross. The fixed compensation is banded on the invoice total instead, before the deduction comes off, because the contractor owes you the whole sum and pays the deduction to HMRC on your behalf. No court has ruled on this yet.
Sendinvo works out the interest and the fixed sum on an overdue sterling invoice, and drafts a separate invoice for you to read before it goes.