Before adding late payment interest to a business invoice
Check the customer, terms, due date and payment record before adding statutory interest or recovery costs to an unpaid commercial invoice.
Check who owes the money
Start with the contracting customer, not just the property where you worked. The statutory commercial late-payment route is for qualifying business debts. Do not apply it to a domestic consumer invoice as a standard admin charge.
Keep the accepted quote or order, invoice and terms together. Check any dispute, payment received or credit note before calculating a balance.
Establish when it became late
Use the agreed payment terms and the relevant rules to establish the due date. Record when the invoice was received and when the goods or service were provided where those dates matter.
If the due date or contract is unclear, resolve that before sending an interest demand. Ordinary reminders can ask for the missing information without claiming a charge is already due.
Check the interest route
Government guidance describes statutory interest as eight percentage points above the Bank of England base rate for business-to-business debts. It also says a different contractual interest rate prevents claiming that statutory rate. Check the applicable contract and rate for the debt rather than using a fixed rate saved in a template.
Record the unpaid amount, the applicable annual rate, the days used and the calculation. Government guidance says to send a new invoice when adding interest. Get appropriate advice where the contract or entitlement is disputed.
Keep recovery costs separate
The published fixed recovery sums are £40 for a debt below £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. The guidance allows one fixed charge for each qualifying payment, not a new charge for every reminder.
Keep the debt reference and entitlement visible. Do not stack charges automatically because another email was sent. Check any further recovery costs separately before demanding them.
Give the desk an approval checklist
The desk can gather the records and prepare the calculation. You approve the amount and escalation. Keep disputed debts out of the ordinary reminder queue while they are reviewed.
- Correct contracting customer and qualifying commercial debt.
- Accepted terms, invoice and due date checked.
- Payments and credits checked against the current balance.
- Applicable interest basis and calculation recorded.
- Any recovery charge checked and not duplicated.
- Owner approval recorded before the revised demand is sent.