By Paragon Credit Management | Last reviewed: October 2026

When another business pays you late, the law usually lets you claim interest and compensation on top of the invoice. Use the free calculator below to see how much you could claim. It takes about 30 seconds.

Quick answer: Under the Late Payment of Commercial Debts (Interest) Act 1998, UK businesses can usually claim interest at 8% above the Bank of England base rate on late business-to-business invoices, plus fixed compensation of £40, £70 or £100 per invoice.

How do you use the calculator?

1. Enter the amount overdue on the invoice.
2. Choose whether you agreed a payment date. If you did, enter it. If you didn’t, enter the date the customer received the invoice or the goods or services were delivered (whichever is later) and the calculator adds 30 days.
3. Enter the date to calculate up to. Use today’s date for an invoice that is still unpaid, or the date it was paid.
4. Check the base rate and change it if the rate that applies to your invoice is different.

You can then copy the summary and paste it into a reminder, a statement or a letter before action.

How is late payment interest calculated?

Quick answer: Statutory interest is simple interest charged daily. The formula is the amount overdue × (base rate + 8%) ÷ 365 × the number of days late.

Worked example (illustrative figures): A £5,000 invoice was due on 1 September and is still unpaid on 31 October, which is 60 days late. Using an example base rate of 3.75%, the statutory rate is 11.75% a year.

• £5,000 × 11.75% = £587.50 a year, or about £1.61 a day
• 60 days of interest = £96.58
• Fixed compensation for a debt of £1,000 to £9,999.99 = £70
• Total you can claim: £166.58

The interest is not compound, so it doesn’t build on itself. Use the base rate that applies to your own invoice, as the rate in this example is only there to show the method.

How much fixed compensation can you claim?

Quick answer: You can usually claim one fixed sum per late invoice: £40, £70 or £100, depending on the size of the debt.

Size of the debt	Fixed compensation per invoice
Under £1,000	£40
£1,000 to £9,999.99	£70
£10,000 or more	£100

The sum depends on the amount of the debt, not on how many days it is late. If the costs of recovering the debt are higher than the fixed sum, you may be able to claim reasonable additional costs. The calculator doesn’t include these.

When does an invoice count as late?

Quick answer: An invoice is late once the agreed payment date has passed. If no date was agreed, it is generally treated as late 30 days after the customer received the invoice or the goods or services were delivered, whichever is later.

Interest normally runs from the day after the payment date. This is why the calculator asks whether you agreed a payment date, and adds 30 days if you didn’t.

Which base rate should you use?

Quick answer: Use the Bank of England base rate in force on 30 June or 31 December before the invoice became late.

• For invoices that become late between 1 July and 31 December, use the base rate on 30 June.
• For invoices that become late between 1 January and 30 June, use the base rate on 31 December.

That rate then applies for the whole period the invoice remains unpaid. Check the Bank of England’s published rate before you rely on the figure in the calculator.

When might statutory interest not apply?

Statutory interest is a strong right, but it doesn’t apply in every situation.

• Consumers. The Act covers business-to-business contracts for goods and services, not sales to consumers.
• Your contract. If your contract provides a substantial remedy for late payment, it can replace the statutory right.
• Disputed invoices. Interest only builds on money that is genuinely owed, so a valid dispute can affect what you can claim.
• Certain types of contract. Some contracts are excluded from the Act.
• Rule changes. The government has proposed further changes to commercial payment rules, so check the current position before relying on any figures.

For the latest, read our overview of late payment rules in the UK.

How do you claim interest and compensation?

Quick answer: Tell the customer in writing what you are claiming and how you worked it out. Include it in reminders, statements and any letter before action.

A short, clear sentence is usually enough:

Under the Late Payment of Commercial Debts (Interest) Act 1998, interest and compensation of £[amount] has accrued on invoice [number]. Please pay the total of £[amount] by [date].

It is a commercial decision whether to enforce the full amount. Some businesses offer to waive interest if the invoice is paid promptly, which can speed up payment and protect the relationship.

What if the customer still doesn’t pay?

Interest and compensation add pressure, but they rarely settle a debt on their own. If reminders and a formal demand haven’t worked, the next steps are usually a letter before action, a court claim and, if a judgment is made and ignored, enforcement. Our guide to how to enforce a CCJ explains what happens after judgment.

If you would rather not chase it yourself, Paragon Credit Management can take over. We recover unpaid commercial invoices for businesses across the UK, with no upfront fee and a 15% commission only on money we recover. If we don’t recover, you don’t pay our commission. Court, solicitor and enforcement costs, where needed, are agreed with you in writing first. See our Client FAQs and commercial debt recovery service.

No collection, no fee. Submit your debt for a free review.

Late payment interest FAQs

Do I need a late payment clause in my terms? No. The statutory right applies automatically to most B2B contracts. A clause can still help, but if it provides a substantial remedy it can replace the statutory interest, so make sure it is reasonable.

Is late payment interest simple or compound? Simple. It is calculated on the amount overdue and doesn’t compound.

Can I claim interest from a limited company or a sole trader? Yes, as long as the debt arises from a business-to-business contract for goods or services. The customer being a limited company or a sole trader doesn’t change the right.

Do I claim the fixed compensation for each invoice? Yes. The fixed sum is per late invoice, based on the size of each debt.

Can I claim interest on an invoice that has already been paid late? Usually yes, for the period it was late, although many businesses choose not to for the sake of the relationship. It is a commercial decision.

How accurate is the calculator? It gives a good estimate using the figures you enter. The result depends on the dates and base rate you use, and it doesn’t include recovery costs, so treat it as a guide.

What if my customer disputes the invoice? Ask them to explain the dispute in writing and separate any disputed amount from the undisputed balance. Interest is only due on what is genuinely owed.

Important information

This article and the calculator are general information for businesses and are not legal advice. Laws, rates and procedures change, and every case is different. For advice on your circumstances, speak to a solicitor.