Late payment of a trade invoice: 8% over base rate and a £40, £70 or £100 fixed sum, worked for an online shop

An online shop that makes candles sells a £2,400 trade order to a gift shop on a handshake and an invoice. Forty-five days after delivery the invoice is unpaid, and the owner is unsure whether to chase, let it go, or whether the law gives her anything to chase with. It does. The rule is short and it is on GOV.UK, so this guide puts figures to it.

What GOV.UK says

For business-to-business sales of goods or services, a payment date that is agreed should usually fall within 60 days. If none is agreed, the payment is late 30 days after the customer receives the invoice, or after you deliver the goods or provide the service, whichever is later.

You can then charge statutory interest of 8% plus the Bank of England base rate, unless the contract sets a different rate. You work out the interest for a year and divide by 365 for a daily figure. You can also claim a fixed sum for debt recovery costs:

The page says the sum can be charged once per payment, and that you may also claim reasonable costs for each attempt to recover the debt.

The £2,400 invoice worked

The base rate changes, so I have used 4% as an assumption of our own. Replace it with the rate on the Bank of England site.

1. Annual rate: 8% + 4% = 12%.
2. Annual interest: £2,400 × 12% = £288.
3. Per day: £288 ÷ 365 = £0.79.
4. Interest for 45 days late: £288 × 45 ÷ 365 = £35.51 (the rounded £0.79 a day gives £35.55).
5. Fixed sum for a debt of £1,000 to £9,999.99: £70.

Total owed on top of the invoice: £105.51. A smaller £950 invoice carries £40 and £14.05 of interest for the same 45 days. A £12,000 invoice carries £100.

When the days start

The 45 days in the example run from the date payment was due, not from the invoice date. If the invoice said "30 days" and was received on 1 September, payment was late on 1 October, so a day count to 15 November is 45. An invoice that agrees a date beyond 60 days is allowed between businesses if it is fair to both, so read what the customer accepted.

What this does not cover

• Consumers. The rules are for sales between businesses, so a private customer who pays late is dealt with differently. I did not read that route.
• Different interest in the contract. The page says you cannot claim statutory interest where the contract has a different rate, so a trade account form with its own terms comes first.
• Starting the interest. The page I read gave the rate and the daily method but did not say how long to wait before adding it, so send a new invoice for the figure and keep the original.

A reminder that names the number

A plain three-line email works: the invoice number, the date it fell due, the amount, and the figure above with the working. Keep the tone level; the sum is the law's, not a threat. If a customer disputes the goods, the problem is a different one: see how a chargeback is answered for a card dispute, and the product margin calculator for whether a trade price leaves room for a 45-day wait at all.

Overlyft builds AI staff who join your shop team and watch each trade invoice against its due date, draft the reminder with the interest worked out for you to approve, and keep the daily figure up to date until the money lands.

This is general information, not legal advice. Check GOV.UK before you rely on it.