Breakdown
How it works
From the day after the due date (or 30 days after invoice/delivery if no terms), B2B debts accrue simple interest at 8% above the Bank of England base rate fixed on the previous 31 December or 30 June. You may also claim fixed compensation (£40 under £1,000, £70 under £10,000, £100 above) per invoice plus reasonable recovery costs.
Formula
Daily interest = amount × (base + 8%) ÷ 365
Interest = daily × days late
Total = interest + fixed compensation
Worked example
£4,500 invoice 80 days late at 4% base: £4,500 × 12% × 80 ÷ 365 = £118 + £70 compensation = £188.
Frequently asked questions
Do I need a clause in my contract?
No — the statutory right applies automatically unless the contract has a "substantial remedy" for late payment.
Does it apply to public sector customers?
Yes, and public bodies must pay within 30 days.
Can I claim after being paid?
Yes, interest and compensation can be claimed for up to six years after the late payment.