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The late-payment calculator
When another business pays you late, UK law sets out exactly what you can add to the invoice: statutory interest, plus a fixed compensation sum. This page works both out — then prices the thing the interest never covers: the hours someone spends chasing. Business-to-business invoices only; consumer debts are a different regime.
What the law says.
The Late Payment of Commercial Debts (Interest) Act 1998 gives every business the right to charge interest on an overdue commercial invoice at 8% plus the Bank of England base rate — no contract clause needed. The base rate used is fixed twice a year: the rate on 30 June applies to debts becoming overdue in the second half of the year, the rate on 31 December to the first half. The base rate is 3.75%, so for a debt that became overdue between 1 July and 31 December 2026 the statutory rate is 11.75% a year. On top of the interest, each unpaid invoice earns a fixed compensation sum:
| Unpaid invoice | Fixed sum you can add |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
The fixed sums are section 5A of the Act, claimable once per debt; reasonable recovery costs beyond the fixed sum can also be claimed. Count the amount owed including VAT — the debt is the gross figure (the Small Business Commissioner's calculator does the same). If no payment date was agreed, an invoice becomes late 30 days after the customer gets the invoice or the goods or service, whichever is later. And if your contract sets its own interest rate for late payment, that applies instead — the statutory scheme is the backstop, per gov.uk's guidance.
Base rate: 3.75%, held at the Bank of England's June 2026 meeting. The reference rate re-fixes each 1 January and 1 July — next check: 1 January 2027.
What you could charge them.
3.75% is the rate fixed on 30 June 2026, for debts becoming overdue 1 July – 31 December 2026. Statutory interest runs at this plus 8%.
What these invoices owe you
£0 today
Interest of £0 plus £0 in fixed compensation — and it grows by about 0p a day while they stay unpaid.
Statutory rate applied: 11.75% a year · interest computed the way gov.uk's own example does — a daily rate rounded to the penny, times days late
Business-to-business debts only, and only where the contract doesn't set its own late-payment interest. If yours does, the contract rate applies — this is the statutory backstop, not advice on your contract.
One reference rate is applied throughout — the rate fixed for the six-month period in which the debt became overdue, which is the method the official guidance uses.
The fixed sum is claimable once per debt. Reasonable recovery costs beyond it can be added too — we don't estimate those here.
Almost nobody sends that bill. The government's 2025 late-payment study found only 6% of firms apply late-payment penalties, and only 4% chase before the due date — and its authors note that doing more of this "would come at the cost of additional staff resource" (DBT / London Economics, 2025).
That's the real bill. Not the interest you never charge — the hours someone spends asking for money the business has already earned.
What chasing costs you.
The all-in cost of an hour: ONS median wage + 15% employer NI. £19 is the same blended admin rate as our other calculators — nudge it for whoever does your chasing.
Assumes 46 working weeks a year.
What the chasing itself costs
£0 a year
That's £0 a month — 0 hours a year — spent asking for money you're already owed.
This prices the time, not the cash-flow gap or the invoices that never get chased at all — and in real firms the chasing lands on one or two people, not everyone evenly.
A priced cost is not a captured saving. Getting the hours back means the chasing running itself — measured, one process at a time.
For scale: the government's central estimate is that an affected business spends 86 hours a year chasing overdue invoices — about two hours a week over a 46-week year (DBT / London Economics, 2025).
Start here
The chasing could run itself.
Reminders that go out on time, in your tone, and stop the moment payment lands — that's a build we know well. Book a free 30-minute process audit: bring the aged-debtors list, and you'll leave with a written map of what could run itself, whether or not we ever work together.
No pitch deck, no obligation. The map is yours either way.
How the chasing runs itself, in one page: invoice chasing that stops when payment lands →. The evidence behind the hours figure, taken apart: what chasing late payments actually costs →. Prefer to price the rest of the manual work? The cost-of-manual-work calculator → · the re-keying calculator →. Or rank every process at once: the 20-question self-audit → — free, two minutes, no email. This tool is maintained by The Quiet Engine — custom software for UK small businesses, on a monthly retainer. The model, in 90 seconds →
Sources
- Late Payment of Commercial Debts (Interest) Act 1998 — the right to statutory interest; s.5A fixed sums (inserted 2002, amended 2013). live · s.5A
- Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 — 8% over a reference rate fixed each 30 June / 31 December. live
- GOV.UK, Late commercial payments: charging interest and debt recovery — the guidance and the worked example this tool's rounding follows. interest · compensation
- Bank of England, Monetary Policy Summary, June 2026 — Bank Rate held at 3.75% (the 30 June 2026 reference rate). live
- DBT & Office of the Small Business Commissioner / London Economics, Late Payments Research, July 2025 — the 86 hours/year and 6%-charge-penalties figures. report (PDF)
- Wage basis (£19/hr loaded, 46 weeks): ONS ASHE April 2025 medians + 15% employer NI — full working on the how-we-count page and the re-keying calculator.