Question 1

What interest can I charge on late invoices?

Accepted Answer

Under the Late Payment of Commercial Debts Act 1998, you can charge interest at 8% above the Bank of England base rate (currently 4.5%, making the statutory rate 12.5% per annum). This applies to business-to-business transactions.

Question 2

Can I claim compensation as well as interest?

Accepted Answer

Yes. You can claim a fixed compensation amount: £40 for debts up to £999.99, £70 for debts from £1,000 to £9,999.99, and £100 for debts of £10,000 or more. This is in addition to the interest.

Question 3

Do I need to mention late payment terms on my invoice?

Accepted Answer

It helps but it is not required — the statutory right to claim interest exists even if your invoice does not mention it. TradeTally includes payment terms on every invoice automatically.

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