What is late payment compensation, and is it £40, £70 or £100?
The short answer
All three. If you sold to another business6, late payment compensation is a fixed sum added for every late invoice, on top of interest3: £40 under £1,000, £70 between £1,000 and £9,999.99, and £100 from £10,0008. The sum is set by law, so you don't have to show what chasing cost you, and an invoice for £50 still carries the full £408.
England and Wales only. WolfX is software, not a law firm.
What you can add
Three late invoices, £210 before interest
Say you printed for another business and sent three invoices: £450 due on 31 July 2026, £3,200 due on 15 August 2026 and £12,000 due on 31 August 2026. On 8 October 2026 none has been paid. All three are late, so each carries its own fixed sum, set by its own size.
The £210 does not grow, but interest does: at 11.75% a year4, the rate for invoices that go late in the second half of 2026, it comes to £5.04 a day across the three.
The road ahead
Four steps. All free.
Step 1: Check it counts
The Late Payment of Commercial Debts (Interest) Act 1998 covers you if you sold goods or services to another business6 and the payment date has passed. With no date agreed, that is 30 days after they got the invoice or you delivered, whichever is later1.
The fixed sum is yours once interest starts8, on the day after the due date7. Invoices they have since paid late usually carry it too: the Small Business Commissioner says you can charge compensation on them5.
Step 3: Add interest, and any costs above the fixed sum
Interest is separate: 8% a year above the base rate2, worked out invoice by invoice.
If your reasonable costs of getting paid come to more than the fixed sum, you can claim the difference8 on contracts made on or after 16 March 201310. Keep the receipts for those.
Step 4: Send one letter with one date
Email the letter below with a new invoice2 for the interest and the fixed sums, one line for each late invoice. Name a pay-by date 14 days away. If the date passes in silence, the next step is a letter before action.
A letter you can copy
Letter adding fixed sums to several late invoices
Send it when two or more invoices from the same client are past their payment dates and a friendly reminder has not worked.
Tap a highlighted gap to see what goes in it.
Email it to the person who approves payments, so it is dated, and keep a copy with the invoices. List the late invoices in due-date order, and attach the new invoice.
When not to bother
When it isn't worth it
- The buyer is a consumer. The law covers contracts where both sides act in the course of a business6, so a homeowner owes you no fixed sum.
- Your contract has its own late fee, and it is a fair one. Then statutory interest does not run9, and the fixed sum only starts once it does8. Use the contract's fee.
- It is one invoice, a day or two late, from a client you want to keep. Ask for a date first. The fixed sum is the same on day 2 as on day 200.
- It went late more than six years ago. Claims on a simple contract debt usually have to start within six years11.
The Wolf's note
Ten late £50 invoices carry £400 between them. One late £50,000 invoice carries £100. The count matters more than the size, so list every late invoice before you write, and keep the list for the next one.
Mr. Wolf · the AI inside WolfX
What comes next
Your next move
How do I work out late payment interest to the day?
Multiply the invoice by the yearly rate, divide by 365, then multiply by the days late.
6 min read · Letter included
Can I claim interest on invoices my client already paid late?
Usually. Being paid does not end the right to interest and a fixed sum of £40, £70 or £100 per invoice, and you can claim up to six years back.
6 min read · Letter included
Can I charge for the cost of chasing a debt on top of the fixed sum?
Yes, but only the difference.
5 min read · Letter included
Don't want to do this yourself?
The Wolf does every step for you. He works out the sums, writes the letters and keeps track of every date. Nothing goes without your yes.