Use this UK late payment compensation calculator to estimate the fixed compensation amount that may apply to an overdue commercial invoice. In the UK, businesses may be able to claim fixed compensation on qualifying late commercial payments, in addition to statutory late payment interest.
This tool is designed for UK business-to-business invoices. It can help small businesses, freelancers, contractors and service providers understand whether a fixed compensation amount of £40, £70 or £100 may apply.
Calculate late payment compensation
How UK late payment compensation works
UK late payment compensation is designed to help businesses recover some of the cost of chasing overdue commercial debts. The fixed compensation amount depends on the size of the unpaid debt.
£40 for debts under £1,000
£70 for debts from £1,000 to £9,999.99
£100 for debts of £10,000 or more
When can you use late payment compensation?
Late payment compensation is generally relevant where the debt relates to a business-to-business transaction, the invoice is overdue, the payment terms have passed, and the debt is for goods or services supplied.
The debt relates to a business-to-business transaction
The invoice is overdue
The payment terms have passed
The debt is for goods or services supplied
There is no conflicting contractual recovery cost arrangement
Late payment compensation vs late payment interest
Late payment compensation is a fixed amount. It does not depend on how many days the invoice is overdue.
Late payment interest is different. Interest is calculated based on the invoice amount, the annual interest rate, the number of overdue days, and the relevant payment date or calculation date.
Example calculation
If a UK business has an overdue invoice of £1,500, the compensation band would usually be from £1,000 to £9,999.99. The fixed compensation amount would therefore be £70.
This fixed compensation can be considered separately from any statutory late payment interest that may also apply.
Important notes before claiming compensation
Check whether the invoice is actually overdue
Check whether the customer is a business rather than a consumer
Check whether your contract has its own late payment wording
Check whether your payment terms clearly state the due date
Keep records of the invoice, due date and payment reminders
Avoid double-counting charges or applying the wrong rules
Suggested wording for an overdue invoice reminder
You can use wording such as:
Our records show that invoice [invoice number] for [amount] was due on [due date] and remains unpaid. As this is now overdue, we may add statutory late payment interest and fixed compensation in line with UK late payment rules. Please arrange payment as soon as possible or contact us if there is an issue with the invoice.
Disclaimer
This calculator provides general information and simple estimates only. It is not legal advice. Late payment rules can depend on your contract, customer type, payment terms and the facts of the transaction. If you are dealing with a disputed invoice or a significant debt, consider getting professional advice.