Who the rules apply to
The rules cover contracts for the supply of goods or services between businesses, and between businesses and public bodies. They do not apply to sales to consumers.
Statutory interest: 8% over base rate
Unless your contract sets a different “substantial remedy” for late payment, you can charge interest at 8% a year above the Bank of England base rate. The base rate used is the one in force on 30 June or 31 December immediately before the day the debt became overdue, depending on when that happened.
When interest starts
If the contract or invoice sets a payment date, interest runs from the day after it. If no date is agreed, interest starts 30 days after the customer received the goods or services, or after the invoice, whichever is later.
Fixed compensation: £40, £70 or £100
In addition to interest, you can claim a fixed sum for each late invoice, depending on the size of the debt:
- £40 for debts under £1,000
- £70 for debts of £1,000 to £9,999.99
- £100 for debts of £10,000 or more
You may also claim reasonable additional recovery costs that exceed the fixed sum.
Practical steps
- State the payment terms and your right to claim interest on every invoice.
- Send a polite reminder before the due date and again soon after it passes.
- Keep a record of every reminder and every payment promise your customer makes.
- If an invoice stays unpaid, follow the escalation steps on GOV.UK.
How GuardRailPay helps
GuardRailPay sends reminders before and after the due date, attaches the original invoice, understands customer replies and keeps a record of promised payment dates, so you have a clear trail if an invoice becomes overdue. See how it works and pricing.
This guide is general information, not legal advice. Check GOV.UK or speak to a qualified adviser for your situation.