Late Payment Interest and Compensation Letter

A letter to a business customer formally claiming statutory interest and fixed compensation on overdue invoices under the Late Payment of Commercial Debts (Interest) Act 1998, with a calculation table. It includes a worked example and a step-by-step guide to the calculation so you can get the figures right.

• When a business customer pays late (or has not yet paid) and your contract does not set its own interest rate
• After the invoices have been paid late – you can still claim interest and compensation for the late period
• Alongside, or after, a final demand

• Work out the reference rate for each invoice using the guidance on this page
• Complete the calculation table for every invoice – one row each
• Choose the option paragraph that matches whether the original invoices are still unpaid
• Issue a separate request or non-VAT invoice for the interest and compensation