What can you add to a late invoice?

What the law lets you add

The Late Payment of Commercial Debts (Interest) Act 1998 gives every business the right to charge a late-paying business customer interest at 8% over the Bank of England base rate — 11.75% right now — plus fixed compensation of £40, £70 or £100 depending on the size of the debt. You don't need it in your terms; the Act applies by default.

The interest is simple and daily. A £3,000 invoice 30 days overdue carries £28.97 of interest and £70 of compensation — £3,098.97 now due, growing 97p a day until it's paid.

Business customers only

The statutory sums apply between businesses — a landlord with a portfolio, a letting agent, a shop, a main contractor. They don't apply to an individual paying for work on their own home; there you can only charge interest if your terms say so. Tell the calculator who the customer is and it keeps the letter honest — for an individual it writes a firm reminder instead.

If the letter doesn't work

Most invoices get paid once the customer sees the debt growing daily and a business that clearly knows its rights. If yours doesn't, the next rung is a letter before action and then the small claims court — the guides on what to do when a customer won't pay and taking an unpaid invoice to small claims walk through both.