Work out exactly what a late-paying customer owes you: the statutory interest (8% above the Bank of England base rate) plus the fixed compensation you're entitled to under the Late Payment of Commercial Debts Act 1998.
The interest keeps building every day it goes unpaid. Change the dates or amount and the numbers update instantly.
Worklot raises the invoice the minute a job's signed off, puts a pay-by-card link on it, and chases the late ones for you, so it never gets to this. Built for small engineering and trade firms.
If you invoice another business and they pay late, you have a legal right to interest and compensation, whether or not it's written into your terms. It's set by the Late Payment of Commercial Debts (Interest) Act 1998, and it applies to business-to-business sales (not to consumers).
You can charge 8% plus the Bank of England base rate, worked out day by day from the day after payment was due. With the base rate at 3.75%, that's 11.75% a year. On a £5,000 invoice that's about £1.61 a day, so it adds up fast on a big job left unpaid.
On top of the interest, each overdue invoice carries a fixed sum for the hassle of chasing it:
If chasing the debt cost you more than that (for example a debt-recovery agency), you can claim the reasonable extra cost too.
Interest runs from the day after the agreed payment date. If you never agreed a date, the default is 30 days after the customer received the invoice, or the goods or service, whichever is later.
No. Statutory interest and compensation apply automatically to commercial debts. You don't need a late-payment clause, though you can set your own rate in a contract if it's a genuine remedy.
No. The Late Payment Act covers business-to-business and business-to-public-sector transactions. Charging a private consumer works differently and is governed by your contract and consumer law.
Many firms use the figure as leverage in a chaser rather than always enforcing it, but the right is real and you can pursue it, including through the small claims track. Even mentioning statutory interest and compensation in a reminder often gets an overdue invoice paid.
Statutory interest and compensation are not consideration for a supply, so they're outside the scope of VAT. Calculate interest on the amount actually outstanding.
This calculator is a free tool for general guidance and isn't legal or financial advice. The statutory rate is fixed in six-month reference periods to the Bank of England base rate on 30 June and 31 December; for a formal claim, check the correct reference-period rate and consider taking advice on your specific situation.
Quotes out same-day, invoices raised the moment a job's done, and the money chased on autopilot. The whole office, for small engineering and trade firms.