What you can claim extra - Statutory late payment compensation and interest
Under The Late Payment of Commercial Debts Interest Act 1998
For Business to Business debts (B2B) you can claim extra amounts on top of your overdue
invoice total. A business to business debt does not, as some think, have to be between
bone fidi Limited companies. It can be between two sole traders, or a sole trader
owing money to a LTD company or any combination.
It does not apply to consumer (members of the public) debts. So if for example you
carried out some gardening work at a persons house and they did not pay the invoice
you cannot charge statutory compensation or statutory interest. If however you carried
out the gardening work at the persons office you could.
This is designed to compensate you for your debt collection costs. Unfortunately
the tariff was last updated over 10 years ago so the compensation received is often
inadequate. We add statutory compensation and interest to your debt automatically.
It is calculated on a per invoice basis, so if you had a £999 debt made up from 1
invoice you would be entitled to one payment of statutory compensation ie £40, if
the same debt was made up from 3 overdue invoices you are entitled to 3 x £40 = £120
extra. Statutory compensation is calculated as follows:
Statutory compensation per invoice
Up to £999.99p
£1000.00 - £9,999.99p
£10,000 or more
You are entitled to charge - again we calculate it for you automatically - statutory
interest. This is calculated at 8% above the Bank of England base rate. A reference
rate every 6 months is used to work out the interest as base rate fluctuates. Use
the form below to see how much interest you are entitled to. Again its worked out
on a per invoice basis. The date contract formed field is purely to check that the
debt was incurred after the act came into force, so you don’t have to put an exact
date in for this.