UK late payments (and what you can charge)
When a UK business customer pays an invoice late, the Late Payment of Commercial Debts (Interest) Act 1998 entitles the supplier to statutory interest (Bank of England base rate plus 8%) plus a fixed compensation amount per invoice — automatically, without needing it written into the contract.
At a glance
Accounting- Why it matters
- UK statutory
- Related
- 3 terms
- Walkthroughs
- 3 guides
- Watch out
- Common misconception below
Plain English. UK spelling. No marketing filler.
Why this matters
59% of UK SMEs report being affected by late payments — it’s the single biggest external cash-flow shock the sector reports. The Late Payment Act gives you real legal teeth that most small suppliers never use because the maths and the wording feel intimidating. Statutory interest is currently 13% (Bank of England base 5% + 8%) and the fixed compensation is £40 for invoices under £1,000, £70 for £1,000–£9,999.99, and £100 for £10,000 or more. Applying it consistently turns a slow payer into a paying customer, and the law is on your side.
How YionStack handles it
Every invoice in the accounting module carries a payment-terms clock; the moment it crosses the agreed term, YionAI flags it and drafts the dunning sequence. You approve the tone once; from then on the AI sends the first reminder, escalates politely on schedule, and applies statutory interest + the fixed compensation amount to the invoice if you’ve elected to claim it. The moment payment lands — reconciled from the bank feed — every reminder in flight stops automatically. The dunning rule is reversible and auditable: every action ships with a signed receipt showing who approved what tone, what was sent, and when. The customer is never chased after they pay.
Common misconception
You do not need the right-to-charge-interest in the contract
The Late Payment Act is a statutory right — it applies to commercial debts between businesses regardless of what the contract says (unless the contract specifies a different remedy that meets the “substantial remedy” test). Most small suppliers think they need an explicit clause; they do not. You can also claim reasonable debt-recovery costs (legal fees, agency fees) on top of the fixed compensation if the actual costs exceed it.
Related terms
The whole UK Business Operating System.
VAT, PAYE, Companies House, CIS, payroll, CRM and the AI that watches them — in one place built for UK businesses.