The short answer: a late charge holds up when it was agreed before the work, appears on the invoice and stays within the law where your client is. For business customers in the UK you don’t even need a clause: unless your contract sets a different rate, you can claim statutory interest of 8% plus the Bank of England base rate and a fixed £40, £70 or £100, by sending a new invoice for it (GOV.UK).
Wording to copy
In your contract or quote (own rate): Invoices are due within 14 days. Amounts unpaid after the due date carry interest at 1.5% per month (18% per year) until paid.
In your contract (UK business clients, statutory rate): If payment is late we may claim interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998.
On the invoice: Payment due 23 October 2026. Late payments carry interest as set out in our terms.
On the late-charge invoice: Interest on invoice INV-2026-042 (£2,400.00, due 23 October 2026) for 30 days at 11.75% a year: £23.18. Fixed compensation: £70.00.
Check: £2,400 × 11.75% ÷ 365 × 30 = £23.18. The 11.75% is 8% over a 3.75% base rate; use the rate that applies to your dates.
The legal rules
| Where | Rule | Source |
|---|---|---|
| UK, business customers | Statutory interest of 8% plus the Bank of England base rate, unless your contract sets a different rate; a fixed sum of £40 (debts up to £999.99), £70 (£1,000 to £9,999.99) or £100 (£10,000 or more), once per invoice; and reasonable recovery costs. Send a new invoice to add interest. | GOV.UK: interest, recovery costs |
| EU and Ireland, business customers | Interest under the Late Payment Directive and a fixed compensation of at least €40 once interest is due. Irish rates and amounts are worked out in the calculator. | Directive 2011/7/EU, art. 6 |
| Canada | If a written contract states interest per day, week or month without also stating the equivalent yearly rate, no more than 5% a year can be charged. Write “1.5% per month (18% per year)”, not “1.5% per month”. | Interest Act, s. 4 |
| US | Limits on interest and late fees are set by each state, so check your state’s rules before choosing a rate or a flat fee. | Your state’s law |
The UK statutory scheme applies to late payments between businesses. Charges to consumers depend on what they agreed and on consumer law, so keep them modest and spelled out before any work starts.
Working out the charge
- Monthly rate: $2,000 overdue at 1.5% a month for 2 months = $2,000 × 0.015 × 2 = $60.
- Daily statutory interest (UK): debt × (8% + base rate) ÷ 365 × days late. GOV.UK’s worked example: £1,000 at 8.5% is £85 a year, 23p a day, £11.50 after 50 days (GOV.UK).
- Flat fee: simple to explain, but agree the amount in advance like any other charge.
For UK and Irish business debts, the late payment interest calculator picks the right base rate for your dates and writes the lines for the invoice.
Remind before you charge
Send a reminder a few days before the due date and another a week after it, then a final reminder naming the date you will add the charge (reminder emails to copy). A late payment is often a process problem, such as a missing purchase order or the wrong inbox, and a reminder fixes that faster than a fee.
Sources checked 9 October 2026: GOV.UK late commercial payments, Directive 2011/7/EU, Interest Act (Canada) s. 4 (current to 21 September 2026).