What a late business-to-business invoice is actually worth once statutory interest and compensation are added — at the right rate for the date it fell due.
Three components, and the second is where most calculators — including some widely used ones — get it wrong.
The interest runs from the day after the debt was due, not from the invoice date. If you agreed 30 days and invoiced on 1 March, interest starts on 1 April.
The rate is fixed once and does not move. Statutory interest is 8.0% over the Bank of England base rate — but the relevant base rate is the one in force at the reference date immediately before interest started running. The reference dates are 31 December, which governs debts where interest starts in the first half of the following year, and 30 June, which governs the second half of that year. Once set, the rate applies for as long as the debt is outstanding, even if the base rate changes several times afterwards.
That means an invoice that fell due in 2024 still carries the 2024 rate today. Calculators that apply today's rate to an old debt understate it.
8.0% over the Bank of England base rate in force at the preceding reference date. Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, art. 4. Verified 30 August 2026. For a debt that fell due before 2024, send it to us and we will check the rate.
The fixed compensation is per invoice, not per debtor. £40, £70 or £100 depending on the size of that invoice. Ten unpaid invoices of £2,000 each carry £700 of compensation between them, not £70. And if your reasonable costs of recovering the debt exceed the fixed sum, the difference is recoverable on top.
The Act applies to contracts for the supply of goods or services where both parties are acting in the course of a business. In practice that covers most unpaid trade invoices, including where the customer is a sole trader acting in their business.
It does not apply to consumer contracts, and there are carve-outs — most notably consumer credit agreements and contracts intended to operate as a mortgage or charge. If your customer bought as a private individual rather than for their business, this is not your route and the interest you can claim depends on your contract or the County Courts Act instead.
No. It is implied into qualifying contracts by statute. You can have your own contractual interest rate instead, and if it amounts to a substantial remedy for late payment it will generally displace the statutory rate — but a term that sets a token rate, or that tries to exclude the right altogether, is open to challenge. In most cases businesses are better off relying on the statutory entitlement than on a 2% clause somebody copied years ago.
A fair objection: you want the money and you also want the customer. Two things worth knowing.
First, stating the entitlement is not the same as demanding it. A great many chases say the invoice is accruing statutory interest at a stated daily rate and then, on payment of the principal, quietly do not pursue it. The number does the work; waiving it is a concession you can make once, deliberately, in exchange for prompt payment.
Second, it is far more persuasive as a daily figure than an annual percentage. 'This invoice is costing you £3.22 a day' lands differently from '11.75% per annum', because it turns delay into a running cost rather than an abstraction.
11.75% for debts where interest starts 1 July to 31 December 2026. That is 8.0% over the Bank of England base rate of 3.75%, which is the rate that was in force at the reference date of 30 June 2026. A debt that fell due earlier carries the rate for its own period, and keeps it.
Yes. The entitlement arises by statute when the debt goes late, so it can be claimed retrospectively — you do not lose it by not having mentioned it at the time. The practical limit is the 6-year limitation period for a simple contract debt, running from when the debt fell due.
Per invoice. Each qualifying late payment carries its own fixed sum of £40, £70 or £100 depending on the size of that debt. This is the single most overlooked figure on an aged ledger — a customer with twelve late invoices owes twelve fixed sums.
Interest runs on the debt that is late, and where the invoice including VAT is unpaid, that is the sum outstanding. What you should not do is claim interest on VAT you have already recovered. If part of the invoice has been paid, calculate on the balance actually outstanding.
Statutory interest on a qualifying debt is an entitlement rather than a discretion, and it is routinely included in judgments on undefended debt claims. A court retains a power to remit statutory interest in whole or in part where the interests of justice require it — for instance where the creditor's own conduct caused the delay — but that is the exception.
One page on statutory interest, the fixed compensation sums and what else is recoverable, with the current rate.
Tell us what you are owed and who owes it. You get back what the debt is actually worth once interest and compensation are added, what we would do first, and the fixed fee for doing it.