Guide · Unpaid invoices

The work is done. The invoice
is still unpaid.

If a business client is sitting on your invoice, the law doesn't just say they should pay. It quietly adds interest at 8% above the Bank of England base rate and fixed compensation to what they owe you, automatically, whether or not your contract mentions it.

1.Interest is an implied term. You didn't need to ask.

That covers business-to-business supplies of goods and services: a band and a venue, a freelancer and an agency, a wholesaler and a shop.

Late Payment of Commercial Debts (Interest) Act 1998 · s.1 · Statutory interest.
"It is an implied term in a contract to which this Act applies that any qualifying debt created by the contract carries simple interest subject to and in accordance with this Part. (2)Interest carried under that implied term (in this Act referred to as “statutory interest”) shall be treated, for the"…
In plain English: This law allows businesses to charge interest on unpaid invoices when another business fails to pay them on time. It automatically adds a right to claim interest to business-to-business contracts, even if it isn't written in the agreement.
§ Read the full text on legislation.gov.uk →

2.Plus a fixed sum, per invoice

The moment statutory interest starts running, a fixed compensation amount attaches to each unpaid debt: £40 under £1,000, £70 to £10,000, £100 above that:

Late Payment of Commercial Debts (Interest) Act 1998 · s.5A · Compensation arising out of late payment
"Once statutory interest begins to run in relation to a qualifying debt, the supplier shall be entitled to a fixed sum (in addition to the statutory interest on the debt). (2)That sum shall be– (a)for a debt less than £1000, the sum of £40; (b)for a debt of £1000 or more, but less than £10,000,"…
In plain English: If a business customer pays you late, you are legally entitled to charge them a fixed fee on top of any interest owed. This fee ranges from £40 to £100 depending on the size of the debt, and you can also claim extra costs if your recovery expenses are higher.
§ Read the full text on legislation.gov.uk →

3.When does the clock start?

From the agreed payment date. No date agreed? The law supplies one: 30 days after delivery of the goods or performance of the service (or the invoice, if later):

Late Payment of Commercial Debts (Interest) Act 1998 · s.4 · Period for which statutory interest runs.
"“The relevant 30-day period” is the period of 30 days beginning with the later or latest of— (a)the day on which the obligation of the supplier to which the debt relates is performed;"…
In plain English: This law sets the specific date from which a business can start charging interest on unpaid invoices. It defines when a payment is officially considered late based on agreed terms or standard time limits.
§ Read the full text on legislation.gov.uk →

4.What to do

Want to know where you stand?

Tell us what happened in your own words. We check it against the law above, free, and give you a straight answer either way. If the law is on your side, your formal demand for payment, with the statutory interest and fixed sum computed, is £2.99.

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Statutory interest and fixed sums apply to business-to-business debts across the UK. This is guidance to help you understand your rights, not formal legal advice, and we're entirely independent: no affiliation with Citizens Advice, GOV.UK or any law firm. Every quotation above links to the official text so you can check us. Law verified current at July 2026.