Late commercial payments: charging interest and debt recovery
You can claim interest and debt recovery costs if another business is late paying for goods or a service.
If you haven’t already agreed when the money will be paid, the law says the payment is late after 30 days for public authorities and business transactions after either:
- the customer gets the invoice
- you deliver the goods or provide the service (if this is later)
You can agree a longer period for payments from one business to another – but if it’s longer than 60 days it must be fair to both businesses.
The interest you can charge if another business is late paying for goods or a service is ‘statutory interest’ – this is 8% plus the Bank of England base rate for business to business transactions. You can’t claim statutory interest if there’s a different rate of interest in a contract.
You can’t use a lower interest rate if you have a contract with public authorities.
The current Bank of England base rate is 0.5%, so statutory interest for a recent debt would be 8.5%.
Check the Bank of England base rate history.
If your business were owed £1,000:
- the annual statutory interest on this would be £85 (1,000 x 0.085 = £85)
- divide £85 by 365 to get the daily interest: 23p a day (85 / 365 = 0.23)
- after 50 days this would be £11.50 (50 x 0.23 = 11.50)
Send a new invoice if you decide to add interest to the money you’re owed.
You can also charge a business a fixed sum for the cost of recovering a late commercial payment on top of claiming interest from it.
The amount you’re allowed to charge depends on the amount of debt.
|Amount of debt||What you can charge|
|Up to £999.99||£40|
|£1,000 to £9,999.99||£70|
|£10,000 or more||£100|
These amounts are set by late payment legislation.
If you are a supplier, you can also claim for reasonable costs in recovering debt.
Read more on recovering debt.