Can I charge interest on a late paid business invoice?

Corven guide, 7 October 2026

Yes. Where one business supplies goods or services to another, the Late Payment of Commercial Debts (Interest) Act 1998 implies a term into the contract that a qualifying debt carries simple interest if it is paid late, and gives the supplier a fixed sum for the cost of recovery.

When the Act applies

Section 2(1) applies the Act to a contract for the supply of goods or services where the purchaser and the supplier are each acting in the course of a business, other than an excepted contract. Section 1(1) makes it an implied term of such a contract that a qualifying debt carries simple interest. The Act calls this statutory interest.

When interest starts

Under section 4(2), statutory interest starts on the day after the relevant day for the debt, at the rate prevailing under section 6. Section 4(2A) makes the relevant day the agreed payment day where there is one, and otherwise the last day of the relevant 30 day period. Where the purchaser is not a public authority and the agreed payment day falls later than the end of the relevant 60 day period, section 4(2E) makes the relevant day the last day of that 60 day period, subject to the exceptions in that section.

The fixed sum

Once statutory interest begins to run, section 5A(1) entitles the supplier to a fixed sum in addition to the interest. Section 5A(2) sets it at £40 for a debt of less than £1,000, £70 for a debt of £1,000 or more but less than £10,000, and £100 for a debt of £10,000 or more.

This guide is general information about the law of England and Wales. It is not advice on your situation.