UK COMMERCIAL CREDIT / PRACTICAL GUIDE
Late Payment Interest and Debt Recovery Compensation: UK B2B Guide
Some late business invoices may carry statutory interest and fixed compensation, but the rules depend on the transaction and the contract.
Statutory interest is not a fixed 8%
Government guidance describes statutory interest on qualifying commercial debts as eight percentage points above the relevant Bank of England reference rate. A different agreed contractual rate can affect entitlement. Check the current rate and contract before calculating.
The fixed recovery sums
For qualifying late commercial payments, government guidance lists £40 where the debt is below £1,000, £70 from £1,000 to below £10,000, and £100 for £10,000 or more. Entitlement and frequency are determined by the applicable rules, not by a collection agency’s pricing.
Who receives compensation?
Any statutory sum is a creditor entitlement where legally applicable; it is not automatically a debt-collection agency’s revenue. A collector’s own fees must follow its agreement with the creditor. Do not add charges to the debtor without an appropriate legal basis.
What to check before demanding additional sums
Review payment terms, dates, dispute history, contract wording, debtor status, the correct rate for the applicable period and evidence of the actual invoice. Independent advice may be appropriate if the claim is contested.
Practical takeaways
- Check the Bank of England reference-rate rules for the period.
- Keep agency fees separate from statutory creditor entitlements.
- Use official guidance or legal advice before issuing a calculated demand.
Official reference: Read the relevant UK government or regulatory guidance ↗. Check current rules, especially for claims, legal procedures and different UK jurisdictions.
This guide is educational and should not be treated as a legal assessment of a specific debt. Avencrest's services and contact arrangements are still in preparation.