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Should I charge interest at all, or does it backfire?

The short answer

Yes, for a habit. Not for a first slip by a client you want to keep, because GOV.UK says you can choose not to charge interest1. On a short delay the money is in the fixed sum, not the interest: a £2,400 invoice paid 12 days late earns £9.27 of interest at 11.75%11 but a fixed sum of £7010 on top, and the £70 is the same however many days late5.

Mara, WolfX research desk
Written with AI, checked by a person · 9 October 2026

England and Wales only. WolfX is software, not a law firm.

The numbers

What a claim is worth on £2,400.

£70Fixed sum on a £2,400 invoice, the same at 12 days late or 45.10 5

77pInterest a day on a £2,400 invoice at 11.75%.11 12

6 yearsTime limit for a claim over an unpaid invoice (England and Wales).8

What you can add

A £2,400 haulage invoice, 12 days late

Say you run a haulage firm and invoiced another business £2,400, due on 3 August 2026. The client pays on 15 August: 12 days late. Interest started on 4 August, so the rate is the one fixed on 30 June 2026: 8% over a Bank Rate of 3.75%, which is 11.75% a year.

£9.27Interest: £2,400 × 11.75% ÷ 365 × 12 days11

£70.00Fixed sum (invoices from £1,000 to £9,999.99)10

£79.27What the claim is worth on 15 August 2026

Paid on 17 September 2026 instead, 45 days late, the same invoice earns £34.77 of interest plus the same £70.00: £104.77. Interest grows by 77p a day. Set the £79.27 against the chance that asking costs you this client.

The road ahead

Four steps. All free.

Step 1: Put a number on it
A day's interest at 11.75%12 is 32p on £1,000, 77p on £2,400 and £3.22 on £10,000. The fixed sum on those three is £70, £70 and £10010, added once when interest starts. On £2,400 the interest does not pass the £70 until day 91.
Cost: FreeTime: 2 minutes
Step 2: Ask three questions
A government guide written for the 2013 changes calls the rules “the option of last resort for suppliers”2.
Then ask three things. How late is it? Is it a habit or a slip? What would losing this client cost, against what the claim brings?
A first slip by a good client: send a reminder. A habit by a client who matters: ask once, in writing, with a date. A client you are leaving: claim everything, including interest on invoices already paid late.
Cost: FreeTime: 5 minutes
Step 3: Pick a middle path
Put late payment wording on every invoice from now on. Or tell them once, in writing, that interest starts from a date you name, using the letter below. Or offer to drop the interest if they pay by a date you name.
Or keep the right in reserve: a claim over an unpaid invoice usually has six years8. A Bill before Parliament would make interest on late payments mandatory, but it is not law yet9.
Cost: FreeTime: Same day
Step 4: Check what can go wrong
The Act can cut or cancel your interest4 for a period if your own conduct makes that just, and conduct covers anything you did or failed to do. So send invoices on time and correct.
Be careful with “I won't charge this time”. After a debt exists, you and the client are free to agree terms about it6, so a loose note could be read as a deal. Name the invoice and say it is for this one.
Cost: FreeTime: 5 minutes

A letter you can copy

Note to a good client who pays late

Send it to a client who matters and pays late more than once, before you start adding interest.

New email

SubjectPayment dates on my invoices from

Dear , Thank you for your continued business. I am writing about payment dates, so that nothing comes as a surprise. My invoices are due , as stated on each one. Some recent invoices have been paid after their due date. For example, invoice , for , was due on and was paid on . I have not added anything to those invoices. For any invoice due on or after , I will add interest and the fixed sum for late payment if it is paid after its due date, as the Late Payment of Commercial Debts (Interest) Act 1998 allows. Interest is 8% a year above the Bank of England base rate. The fixed sum is £40, £70 or £100, depending on the size of the invoice. Could you confirm by that your accounts team has these due dates on file? If you believe any of this is wrong, please tell me before then and say why. Kind regards,

Tap a highlighted gap to see what goes in it.

Send it by email to the person who approves payments, so it is dated, and keep a copy with your invoices. It says nothing was added to past invoices. It does not say you give them up. Keep that wording, and do not change it to “I will not charge”.

When not to bother

When it isn't worth it

A first slip by a client you want to keep. Send a reminder and save the claim for when it becomes a habit.
The claim is smaller than the risk. Weigh the number from step 1 against the chance that asking costs you the client, not against their whole year. If that chance is real and the sum is small, let it go.
Your client is a consumer. The Act covers sales between businesses3. A consumer who pays late is a different road.
Your contract already has a late fee. A fair one can replace the statutory interest7. The page on your own late fee shows how to tell.

The Wolf's note

The right is yours to use or to leave. A slip needs a reminder; a habit needs the price named once, in writing, with a date. How they answer tells you which one you had.

Mr. Wolf · the AI inside WolfX

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