Late payment
Payment of a commercial invoice after the agreed due date, or after the statutory default period where no terms were agreed, which entitles the supplier to claim interest and compensation under UK law.
Late payment is payment of a business invoice after the date it was due. In the UK, the Late Payment of Commercial Debts (Interest) Act 1998 gives suppliers the right to charge statutory interest at 8% above the Bank of England base rate, plus fixed compensation for the cost of recovery, where a business customer pays late. If no terms are agreed, payment falls due 30 days after the invoice is received.
The cost falls hardest on smaller suppliers, who lose working capital and often choose not to enforce their rights for fear of losing the customer. That imbalance is why late payment has become a policy priority, with the Commercial Payments Bill, introduced in the House of Lords in May 2026, proposing a 60-day cap on most payment terms and new powers for the Small Business Commissioner to adjudicate disputes and penalise persistent late payers.
For both sides, late payment is usually a visibility problem before it is a cash problem. A supplier who cannot see where an invoice sits in the approval process chases blind, and a buyer who cannot see their own payment behaviour cannot fix it. A shared, real-time payment record turns late payment from a dispute into a data point both parties can act on.
Governed by the Late Payment of Commercial Debts (Interest) Act 1998. The Commercial Payments Bill, introduced in the House of Lords on 19 May 2026, proposes a 60-day cap on most payment terms and stronger Small Business Commissioner powers. Its provisions may change before it becomes law.