An unpaid invoice is not automatically a late one. In UK commercial law they split on a calendar date: the day after the relevant day in section 4 of the Late Payment of Commercial Debts (Interest) Act 1998. Until that date the buyer is still inside the payment window. From the next day the payment is legally late.
This article is that date — not the interest rate in statutory interest on late commercial debts, and not what to put in a letter before action. Four rules set it: agreed terms, the 30-day default, the 60-day business outer limit, and the 30-day public-authority cap.
Debt Collection UK (a trading style of PASECOM GROUP LTD) introduces B2B files to independent partner agencies. We are not solicitors and we do not collect debts ourselves. PASECOM GROUP LTD was incorporated in April 2026.
When is a commercial invoice legally late?
GOV.UK states that you can claim interest and debt recovery costs if another business is late paying for goods or a service. The Act tells you which day that lateness starts.
Section 4(2): statutory interest starts to run on the day after the relevant day. That is legally late. Section 4 fixes the relevant day as:
- an agreed payment day, unless a 30-day public-authority or 60-day business outer limit brings it forward; or
- if there is no agreed payment day, the last day of a 30-day period.
Section 2 is the gate. The Act applies to a contract for the supply of goods or services where both purchaser and supplier are acting in the course of a business. Consumer invoices, employment contracts, consumer credit agreements and security arrangements sit outside it and do not use this statutory clock.
What if we agreed payment terms?
Most unpaid invoices already carry a due date: Net 14, 30 days from invoice, end of the month following delivery, or payment on a named milestone. Section 4(2B) calls that an agreed payment day. Section 4(2C) allows a fixed date or a date that depends on an event, so end-of-month and milestone terms can still qualify.
The invoice is then legally late the day after that agreed date, unless an outer limit below applies. Keep the agreement in writing from before the supply: the invoice terms the buyer contracted on, a purchase order, incorporated conditions, or an email confirming “30 days from invoice”. A due date typed onto a later statement, without the buyer having agreed it, is not an agreed payment day.
Example dates only: goods delivered and the invoice received on 3 February, terms 14 days from invoice. Agreed payment day: 17 February. Legally late from 18 February. “Due on 17 February” is not “late on 17 February”. Section 4(2) starts lateness the day after.
What is the 30-day default if no date was agreed?
If you never agreed a payment date, you do not wait indefinitely. Section 4(2A)(b) makes the relevant day the last day of the relevant 30-day period.
Section 4(2H) starts that period with the later (or latest) of:
- the day the supplier performed the obligation (delivery, or completion of the service); and
- the day the purchaser has notice of the amount of the debt, or of the sum claimed if the amount is still being worked out.
GOV.UK’s plain-English version: if you do not agree a payment date, the payment is late 30 days after the later of the customer getting the invoice and you delivering the goods or providing the service. Raising an invoice the buyer has not received does not start the clock.
If the contract uses an acceptance or verification procedure, section 4(5A)–(5D) can bring that completion date into the calculation, but the procedure is treated as completed no later than 30 days after performance unless the contract expressly agrees a longer period that is not grossly unfair to the supplier.
Can a business agree more than 60 days?
Yes, but the Act caps how far that agreement pushes the statutory relevant day.
Where the purchaser is not a public authority, and the last day of the relevant 60-day period falls earlier than the agreed payment day, section 4(2E) makes that 60-day end-date the relevant day — unless section 4(2F) applies because the agreed payment day is not grossly unfair to the supplier. The 60-day period in section 4(2I) uses the same starting points as the 30-day period.
GOV.UK: an agreed payment date must usually be within 60 days for business transactions. You can agree longer, but it must be fair to both businesses. Section 4(7A) judges “grossly unfair” on all the circumstances, including a gross deviation from good commercial practice and from good faith and fair dealing, the nature of the goods or services, and whether the purchaser has an objective reason to go beyond 60 days. Whether a 90-day term survives that test is fact-specific.
How long does a public authority have to pay?
Where the purchaser is a public authority and the last day of the relevant 30-day period falls earlier than the agreed payment day, section 4(2D) makes that 30-day end-date the relevant day. There is no “grossly unfair” let-out equivalent to section 4(2F). GOV.UK matches this: an agreed date must usually be within 30 days for public authorities.
Section 4 currently defines “public authority” (for England, Wales and Northern Ireland) by reference to the Procurement Act 2023, with specified exclusions. A 60-day purchase-order term from an in-scope public body does not delay statutory lateness: the relevant day is brought forward to the end of the 30-day period.
What should you do once unpaid invoices are legally late?
Confirm the date before you escalate. You need the terms, the invoice, when it was sent and received, and when the goods were delivered or the service completed.
Once that date has passed and internal reminders have failed, treat the file as a commercial debt:
- Recalculate the due date against the rules above. Do not rely on an accounts-package “due date” if it ignored delivery, receipt or a public-authority cap.
- Decide whether to add statutory interest and compensation. That prices the delay. It does not change the lateness date.
- If a county court claim is in view, send a compliant letter before action. The letter does not create lateness.
- If chasing has already stalled, a partner debt collection agency can take the file.
Being legally late does not freeze a bank account or guarantee payment. The date only tells you the payment window has closed.
Debt Collection UK can introduce your unpaid invoices to a vetted UK partner agency through the secure claim form. We introduce the file; we do not issue proceedings, and recovery is not guaranteed.
Frequently asked questions
Is an invoice legally late on the due date or the day after?
The day after. Section 4(2) starts statutory lateness on the day after the relevant day. If the agreed payment day is 17 February, the payment is legally late from 18 February.
Does the 30-day default start from the date I raised the invoice?
No. The 30-day period begins with the later of performance and the purchaser having notice of the amount (usually receipt of the invoice). Issuing an invoice the buyer has not yet received does not start the statutory clock.
Are 90-day B2B terms automatically invalid?
No. GOV.UK allows longer than 60 days if that is fair to both businesses. Section 4(2F) keeps the agreed payment day where it is not grossly unfair to the supplier.
If a public body’s purchase order says 60 days, when is the invoice late?
Section 4(2D) brings the relevant day forward to the end of the 30-day period where that is earlier than the agreed date. Diarise that 30-day end-date unless the body falls outside the Act’s definition of public authority.
Does a quality dispute freeze the due date?
No. A dispute does not rewrite section 4. It may affect whether you can prove a qualifying debt. A late, undocumented complaint is not a new payment term.
Can I pass unpaid invoices to an agency the day after they become legally late?
Yes, if internal credit control has already failed. Instruct via the unpaid invoices form. A partner agency takes the recovery; you remain the creditor.