Short answer: On a qualifying B2B contract, the Late Payment of Commercial Debts (Interest) Act 1998 entitles you to fixed compensation for each late invoice: £40 if the debt is under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. It is in addition to statutory interest, and you can claim reasonable recovery costs above it where you can show them.
Late payment compensation: £40, £70 or £100 per commercial invoice
On qualifying B2B contracts, the Late Payment of Commercial Debts (Interest) Act 1998 can give you a fixed sum of compensation for each overdue invoice, on top of statutory interest. The bands are set by the amount of the debt:
- £40 where the debt is under £1,000
- £70 where the debt is £1,000 to £9,999.99
- £100 where the debt is £10,000 or more
Those sums are per overdue invoice where the Act applies, not a random surcharge. They do not replace interest, and they do not guarantee payment.
When the bands apply
You need a qualifying commercial contract and a payment that is legally late. See when a commercial payment is legally late. Consumer debts are out.
Put honest figures in any letter before action. A knowingly false statement in a pre-action letter can be contempt of court.
Instruct a partner if chasing has stalled
Compensation and interest improve the ledger on paper. They do not collect it. Upload the invoice and we introduce a specialist partner. The fee is 15% of what is recovered, payable only when you have been paid (no collection, no fee). We are not solicitors. Recovery is not guaranteed.
How to claim the fixed sum
The compensation becomes due as soon as the invoice is late. Add it to your final demand or letter before action as a separate line for each invoice, with the band that applies and a short reference to the 1998 Act. You do not need to prove you spent that amount: the fixed sum is set by law.
Several invoices from one customer
Compensation is calculated per invoice, not per customer. If a customer has paid five invoices late, each one can attract its own fixed sum according to its value. Make sure each invoice is a genuine, separately payable invoice; splitting one supply into many invoices just to increase compensation is not appropriate.
Reasonable recovery costs above the fixed sum
Since 2013 the Act also allows you to claim reasonable costs of recovering the debt that exceed the fixed compensation, such as the reasonable cost of using a collection agency. These must be genuinely incurred and reasonable, and the fixed sum is deducted from them. They are not automatic, and they may not cover the full cost of collection.
When compensation does not apply
- The debtor is a consumer rather than a business.
- The contract already provides a substantial remedy for late payment that replaces the statutory rights.
- The invoice is not yet legally late, or the amount is genuinely disputed.
Keep good records
Your claim for compensation is only as strong as your paperwork. Keep the signed terms or accepted quote, each invoice with its due date, proof that the goods or services were delivered, and a log of reminders. If the matter later goes to court or to a partner agency, a clean schedule showing each invoice, its due date, the compensation band and the interest running on it saves time and reduces arguments.
Compensation in a court claim
If you issue a County Court claim, you can include the fixed compensation and statutory interest in the amount claimed. Set them out separately from the principal debt so the court can see how the total was reached.
A worked example
A customer owes three late invoices of £800, £2,400 and £12,000. The compensation is £40 + £70 + £100 = £210, plus statutory interest running on each invoice from its own due date. Showing the breakdown clearly makes it harder for the customer to argue with the figures.
Frequently asked questions
How much late payment compensation can I claim?
£40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more, per late invoice.
Is compensation in addition to statutory interest?
Yes. On a qualifying contract you can claim both.
Can I claim compensation on every late invoice?
Yes, each qualifying late invoice attracts its own fixed sum according to its value.
Can I claim more than the fixed sum?
You may claim reasonable recovery costs above the fixed sum where you have genuinely incurred them. They are not automatic.
What if the customer still does not pay?
Upload the invoice and we introduce it to an independent partner agency, who collects. The fee is 15% of what is recovered, payable only when you have been paid. Recovery is not guaranteed.