What the law allows
If another business pays you late, the Late Payment of Commercial Debts (Interest) Act 1998 lets you charge statutory interest at 8% a year above the Bank of England base rate. You can also add a fixed sum for the cost of recovering the debt: £40 for a debt under £1,000, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more. Source: gov.uk, Late commercial payments: charging interest and debt recovery.
How it is worked out
Yearly interest is the amount owed multiplied by the rate. Divide by 365 for the daily figure, then multiply by the days late, counted from the day after the due date. For a £1,000 invoice at 11.75% (8% plus a 3.75% base rate), that is about 32p a day, plus the £70 fixed sum.
When to use it
It is a right, not a duty. Many businesses mention it in the second reminder and claim it only from customers who pay late again and again. If you switch it on in Xevrion, each reminder from the second onwards states the interest and the fixed sum for that invoice, worked out on that day. You approve every reminder before it goes.
What is coming
A Small Business Protections Bill announced in the King's Speech in May 2026 would cap large firms' payment terms to small suppliers at 60 days, make interest on late payment compulsory at 8% above base rate, and give the Small Business Commissioner powers to fine persistent late payers. It is expected to take effect in 2027; the details can still change. Xevrion will follow the final law.