✨ New Feature
Late Payment Calculator & Invoice Generator Now Live
You can now automatically calculate statutory interest and compensation on overdue invoices, then generate a professional PDF to send to your debtor — all in one simple tool.
➤ Try the Calculator NowIf a customer still hasn’t paid and your payment terms have passed, you don’t have to just “wait and hope”. UK law lets businesses add statutory interest and a fixed late payment compensation charge to overdue B2B invoices, making it the start of the debt recovery process. Here’s how it works, when to use it, and copy-and-paste wording you can use today.
What you can add to late B2B invoices
- Statutory interest: 8% above the Bank of England base rate (if your contract doesn’t set a different rate).
- Fixed-sum compensation per invoice: £40 (debts up to £999.99), £70 (£1,000–£9,999.99), or £100 (£10,000+). You can also claim reasonable recovery costs on top where your costs exceed the fixed sum.
- These rights come from the Late Payment of Commercial Debts legislation.
Need help working out the numbers? Use the Small Business Commissioner's calculator (handy for day-by-day interest).
When a formal “Letter Before Action” is required
For most business-to-business debts, it’s best practice to send a short, clear 7–14 day letter before issuing a claim. Where your debtor is an individual or sole trader, the Pre-Action Protocol for Debt Claims applies — you must send a compliant Letter of Claim with information sheets/forms and give 30 days for a response.
Heads-up: If your contract already sets a late-payment interest rate, that usually applies instead of statutory interest.
Copy-and-paste wording you can use
1) Add a note to your overdue invoice
“As payment remains overdue, we are exercising our statutory right to charge interest at 8% above the Bank of England base rate, and a fixed late payment compensation fee in line with the Late Payment of Commercial Debts legislation.”
2) Short 7-day chaser (B2B, non-protocol)
Subject: Overdue invoice — final reminder
Hi [Name],
Invoice [#] for £[amount] fell due on [date]. Please arrange payment within 7 days to avoid additional action. We reserve the right to add statutory interest (8% above BoE base rate) and late payment compensation.
If there’s a query, reply today so we can resolve it.
Thanks,
[Your name/team]
3) Letter Before Action (B2B, concise)
Subject: Letter Before Action — £[amount] owed (Invoice [#])
Dear [Company/Name],
Despite reminders, £[amount] relating to invoice [#] dated [date] remains unpaid. Unless cleared within 7 days, we may issue proceedings without further notice. We will claim the principal debt, statutory interest (8% above the Bank of England base rate), fixed-sum compensation, and reasonable recovery costs as permitted by law.
Please pay to: [bank details/payment link]. If you dispute any part of this sum, tell us in writing within 7 days.
Yours faithfully,
[Your business details]
4) Protocol Letter of Claim (individual/sole trader)
When your debtor is an individual or sole trader, your letter must include specific information and the official Reply Form/Information Sheet, then allow 30 days before a claim. If you’re unsure, use a specialist or compare vetted partners below.
How to calculate statutory interest (quick method)
- Annual interest = Debt x (Base rate + 8%)
- Daily interest = Annual interest ÷ 365
- Total interest = Daily interest x number of days overdue
Example from GOV.UK: on a £1,000 debt at 8.5%, annual interest is £85 (so ~£0.23/day).
When to escalate
- No response to your final reminder / LBA.
- The debtor is stalling and the balance is material to your cash flow.
- You need protocol-compliant action (individual/sole trader) or fast legal escalation.
Compare vetted debt recovery partners — choose to self-compare or let us match you to a specialist for your debt type and amount.
Struggling to pay? If you landed here as a debtor, free help is available from charities like StepChange and National Debtline.
FAQs
Can I charge statutory interest if my contract says nothing about interest?
Yes — that’s exactly when statutory interest applies (B2B).
Can I add compensation on top?
Yes: £40/£70/£100 per overdue invoice, plus reasonable costs if they exceed the fixed sum.
Do I have to send a Letter Before Action?
It’s best practice in B2B and required under the Pre-Action Protocol when the debtor is an individual/sole trader.
Legal references: GOV.UK guidance on late commercial payments (interest and costs), and the Late Payment of Commercial Debts legislation.
