A late payment letter and interest invoice wording you can adapt
For UK business-to-business invoices. Last checked against GOV.UK and legislation.gov.uk.
If a business customer has not paid, a clear letter asking for the invoice and the statutory interest and fixed compensation is often the first step. Below is a template you can copy and adapt. Square brackets mark what you fill in. Work out the figures with the calculator, and see the guides on statutory interest and the fixed compensation for how they are made up.
Letter template
[Your business name] [Your address] [Date] [Customer name] [Customer address] Invoice [number] for £[amount]: overdue, with statutory interest and compensation Dear [name], Our invoice [number], dated [invoice date], for £[amount] was due for payment on [due date]. It has not been paid, and at the date of this letter it is [number of days] days overdue. Under the Late Payment of Commercial Debts (Interest) Act 1998 we are entitled to statutory interest on a late commercial debt, at 8% a year above the Bank of England base rate, and to a fixed sum for the cost of recovery. For this invoice: Statutory interest to [date]: £[interest] (at [rate]% a year; £[daily amount] for each further day) Fixed compensation: £[40, 70 or 100] Please pay the unpaid invoice of £[amount] and the interest and compensation shown above, £[interest plus compensation] in total, by [date]. Interest continues to build up each day until the invoice is paid, so the final figure will be a little higher if payment is later. Our bank details are: [bank details]. We have attached a separate invoice for the interest and compensation. If you think any part of this is wrong, or you have already paid, please tell us at [email or phone] and we will look at it straight away. If we do not receive payment by [date], we may take further steps to recover the money. Yours sincerely, [Your name] [Your business name]
Wording for the interest invoice
GOV.UK says to send a new invoice if you decide to add interest, so the letter above refers to one. Use your normal invoice layout with lines like these:
Invoice [new number] Date: [date] Customer: [customer name] Statutory interest on invoice [original number] ([days late] days at [rate]% a year) £[interest] Fixed compensation for late payment (Late Payment of Commercial Debts (Interest) Act 1998, s.5A) £[40, 70 or 100] VAT (outside the scope of VAT) £0.00 Total due £[total]
If you have an account, ClaimLateInterest can produce this invoice as a PDF with the working shown, and send timed reminders for you.
Before you send it
- Check your contract. If it sets its own late-payment interest, that may apply instead of the statutory rate.
- Make sure the debt is between two businesses and that the invoice really is overdue by its agreed payment date (or 30 days where none was agreed).
- Keep a copy of the letter, the invoice and how you sent them.
- Stay factual and polite. Do not threaten anything you do not intend to do.
- If the customer disputes the invoice or you are unsure of the next step, GOV.UK has a guide on charging interest and recovering the debt, and a solicitor can advise on your case.
Common questions
Do I have to send a letter before I add interest?
The Act does not say a letter must come first. GOV.UK says to send a new invoice if you decide to add interest. A short letter that explains the figures, as in this template, helps the customer see what they are being asked to pay.
What deadline should I give?
The law does not set one for this letter. Pick a reasonable period, often 7 or 14 days, and write the actual date in the letter.
Where do I get the figures?
Use the free calculator on this site, or work them out with the formula in the interest guide. Put the interest in the letter as at the date you write it.
General information, not legal advice