Late commercial payments: charging interest and debt recovery
Interest on late commercial payments
The interest you can charge if another business is late paying for goods or a service is 鈥榮tatutory interest鈥� - this is 8% plus the Bank of England base rate for business to business transactions. You cannot claim statutory interest if there鈥檚 a different rate of interest in a contract.
You cannot use a lower interest rate if you have a contract with public authorities.
Check the .
Example
If your business were owed 拢1,000 and the Bank of England base rate were 0.5%:
- the annual statutory interest on this would be 拢85 (1,000 x 0.085 = 拢85)
- divide 拢85 by 365 to get the daily interest: 23p a day (85 / 365 = 0.23)
- after 50 days this would be 拢11.50 (50 x 0.23 = 11.50)
Send a new invoice if you decide to add interest to the money you鈥檙e owed.