Non-reserved business legal services
Your rights on a late business-to-business invoice, the order to escalate in, and the point at which chasing costs more than the debt is worth.
The invoice went out sixty days ago. The first two chasers got a ‘with accounts, sorry’ reply, the last three got nothing, and now the phone goes to voicemail. Here is the part most owners never use: on a business-to-business debt you can charge statutory interest at 8% above the Bank of England base rate and fixed compensation of £40, £70 or £100 on every unpaid invoice, whether or not your contract says a word about late payment.
Interest that starts to run between 1 July and 31 December 2026 uses the base rate in force on 30 June 2026, which was 3.75%, so the statutory rate is 11.75% a year. That is what turns ‘any update on this?’ into a letter with a number in it. This guide sets out what you are owed, the order to chase in, and the point at which a debt stops being worth pursuing. It is general legal information, not advice on your particular debt.
Work out the figure before you write anything. Our free late payment interest calculator gives you the statutory interest, the daily rate it is still growing at and the £40/£70/£100 compensation, and shows its working.
The Late Payment of Commercial Debts (Interest) Act 1998 gives you three things on a business-to-business debt, none of which need to appear in your contract:
The rate is set for six months at a time rather than moving with every base rate decision. For interest starting between 1 July and 31 December 2026 it is 8% plus the 3.75% base rate in force on 30 June 2026, so 11.75% a year. This is a business-to-business right only; it does not apply to a consumer debt.
Knowing the right exists changes what you write, which is most of the value. You are not asking a favour or hinting at consequences you have not thought through. You are stating a figure that goes up every day the invoice sits there.
The arithmetic takes two minutes. Add 8% to the base rate for the half-year in which interest starts to run, apply it to the debt, divide by 365 for the daily figure, multiply by the days late, then add the compensation for the band the invoice falls into.
This is a made-up scenario written to show the arithmetic, not an account of a real matter, and no outcome is being promised. An £8,000 invoice is 60 days overdue and the interest started to run in the second half of 2026, so the rate is 11.75% a year. That is £940 over a full year, or £2.58 a day, so roughly £155 after 60 days. The debt sits in the £1,000 to £9,999.99 band, so add £70 of fixed compensation. You are no longer asking for £8,000. You are stating that £8,225 is owed and that it rises by £2.58 for every further day it goes unpaid.
Send it the day after the due date, not three weeks later. Most late payment is disorganisation rather than malice, and a short, unemotional note is often the whole solution: invoice number, amount, original due date, how to pay, and a specific new date rather than ‘as soon as possible’. A date creates a task in someone's week. ASAP creates nothing. This is also the stage that protects a relationship worth keeping, so keep the tone level.
If the reminder is ignored, the second letter does the one thing the first did not: it states that statutory interest and fixed compensation are now accruing under the 1998 Act, gives the daily rate in pounds, and sets a final date. Nothing about it needs to be aggressive. Frustration in writing weakens your position; dates and figures strengthen it. Keep a copy of everything with the date it was sent, because that trail is your evidence if this ends up in front of a judge.
Where more than one invoice is outstanding, put them on a single statement with the interest and the compensation shown as separate lines, so the cost of the delay is visible rather than something the reader has to calculate. Then send it to whoever signs off payments rather than to the accounts inbox that has been quietly absorbing your emails. An invoice can sit unpaid for months simply because the person with authority to release it has never seen a single chaser.
This is the formal notice that comes before court proceedings, and it is the point at which a reluctant payer either pays or finally tells you why they are not going to. It sets out who you are, what was agreed, what was delivered, what is owed including interest and compensation, what you require and by when, and that you will issue proceedings if payment is not made. Send it in a way you can prove was received.
One trap before you do. Where a business is claiming from an individual or a sole trader, the Pre-Action Protocol for Debt Claims applies and it is prescriptive: specified information, an information sheet, a reply form, a financial statement, and 30 days for the debtor to respond. Get that process wrong and a court can penalise you on costs even where you win. Send a letter before action only when you are genuinely prepared to follow through, because a threat you do not act on teaches the other side exactly how seriously to take the next one.
Do the arithmetic before the principle takes over. Claims up to £10,000 usually go on the small claims track, where costs recovery is limited, so you are unlikely to get back the cost of professional help even if you win outright. Above £10,000 the court issue fee is generally 5% of the claim, and the costs risk climbs with the value.
The bigger question is whether the other side can pay at all. A judgment against a company with no assets is an expensive piece of paper. Check their filed accounts at Companies House and any judgments already registered against them before you spend anything, and stay open to a payment plan that gets you most of it this quarter rather than all of it never. A collection agency is a fair option for a straightforward, undisputed debt you have decided not to chase yourself — but they take a percentage of what they recover, and they add nothing at all where the debt is genuinely disputed.
Issuing and conducting proceedings is reserved legal work, and so is speaking for you in court. Buzz Legal does neither. Everything up to that door is non-reserved: the chasing sequence, the statement of account, the letter before action, and the judgement call on whether a claim is worth issuing. If it does have to go further it goes to RHF Solicitors (authorised and regulated by the SRA, no. 324115), with the file already built rather than started again.
The moment the customer says the goods were faulty or the service was not what was agreed, you have a dispute rather than a late payment, and a court will treat it as one. Pressing a letter before action on a genuinely disputed debt can rebound: the pre-action rules expect both sides to engage with the substance and consider settlement, and a claimant who steamrollered a real defence can be penalised on costs.
So go back to the paperwork first — the written scope, the specification, what was signed off, what you actually delivered — and work out whether the complaint has substance. Often it is a scope misunderstanding that a calm exchange settles. Where it is not, you at least know which job you are doing, because chasing a clear debt and defending your work are different problems with different routes. If solicitors are instructed on the other side, the matter is contentious and goes to RHF Solicitors.
Late payment is a paperwork problem long before it is a collection problem, and the fixes are unglamorous. A stated due date rather than ‘30 days’. An interest clause. A retention of title clause if you supply goods, so unpaid stock stays yours. A credit check before you extend terms to a new customer. A deposit or staged payments on anything large. And invoices raised the day the work completes rather than at month end, which on its own can take a fortnight out of your cash cycle.
Then make sure the terms actually apply to the deal. Terms first seen on the back of an invoice bind nobody, because the agreement was made before they arrived. They have to be put in front of the customer at quote or order stage and referenced in whatever they sign or accept. A terms and conditions package is from £695 +VAT, and those clauses are exactly what it covers.
If one specific invoice is stuck, do not write a summary first — send the thing itself. Use the enquiry form with the invoice, your terms if you have any, and the chasers you have already sent, and add one line saying what you actually want: the money, a payment plan, or a decision on whether to write it off. The initial legal review is a free call, and its job is to tell you which of those three is realistic before you spend anything.
If you then want the work done, drafting the chasing sequence, the statement of account and the letter before action is non-reserved work, quoted as a fixed fee agreed in writing before anything starts. Tightening the terms so it stops recurring is the terms and conditions package from £695 +VAT. Having one contract read properly before you sign it is from £249 +VAT — against the £200–£350 +VAT an hour commonly quoted for this kind of work, which buys about an hour. Issuing proceedings is reserved and goes to RHF Solicitors.
This is general legal information, not advice on your situation. For advice tailored to your business, book a legal review. Buzz Legal provides non-reserved business legal support; reserved legal activities are carried out by RHF Solicitors, authorised and regulated by the SRA (no. 324115).
On a business-to-business debt, yes, and without any contract term. The Late Payment of Commercial Debts (Interest) Act 1998 gives you statutory interest at 8% above the Bank of England base rate from the day after the agreed payment date, or after a default of 30 days where no date was agreed. On top of that you can claim fixed compensation per invoice, and reasonable recovery costs above that sum where your actual costs were higher. It does not apply to consumer debts. Very few businesses claim any of it, which is precisely why the same customers keep paying at 90 days without consequence.
Fixed compensation is tiered and applies per invoice, not per customer: £40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. A run of six unpaid invoices at £2,000 each therefore carries £420 of compensation, alongside statutory interest at 8% above base on each of them. Where your actual reasonable costs of recovering the debt exceed the fixed sum — a collection agency fee, for instance — you can claim the difference. Show interest and compensation as separate lines on the statement of account, so the customer can see exactly what the delay is costing rather than having to work it out.
It is the formal notice sent before court proceedings: who you are, what was agreed, what was delivered, what is owed including interest and compensation, what you require and by when, and a statement that you will issue proceedings if payment is not made. Where a business is claiming from an individual or sole trader, the Pre-Action Protocol for Debt Claims applies and is prescriptive — it requires specified information, an information sheet, a reply form and a financial statement, and gives the debtor 30 days to respond. Get the process wrong and a court can penalise you on costs even where you win. Send it only when you are genuinely prepared to follow through.
Not for the chasing. Drafting reminders, statements of account, formal demands and letters before action is non-reserved work, and it is where most debts are actually resolved. A solicitor becomes necessary once the matter becomes a court claim, because issuing and conducting proceedings is a reserved activity — that goes to RHF Solicitors (SRA no. 324115). Enforcement afterwards, meaning bailiffs, charging orders or winding-up petitions, is also outside what we do. The useful division is that we handle everything up to the courtroom door, and the preparation carries across rather than being repeated if the matter has to go through it.
Do the arithmetic before the principle takes over. Claims up to £10,000 usually go on the small claims track, where costs recovery is limited, so you are unlikely to recover the cost of professional help even if you win outright. Above £10,000 the court issue fee is generally 5% of the claim, and the costs risk climbs with the value. The larger question is whether the other side can actually pay: a judgment against a company with no assets is an expensive piece of paper. Check their filed accounts and any existing judgments before you spend anything. Sometimes the right answer is a payment plan that gets you most of it.
Treat it as a dispute rather than lateness, because the court will. Pressing a letter before action on a genuinely disputed debt can rebound: the pre-action rules expect parties to engage with the substance and consider settlement, and a claimant who steamrollered a real defence can be penalised on costs. Start with the evidence — the written scope, the specification, what was signed off, what you actually delivered — and work out whether the complaint has substance. Then decide whether you are chasing a clear debt or defending your work, because those are different problems with different routes. If the other side instructs solicitors it is contentious, and it goes to RHF Solicitors.
Fix the terms and the mechanics together. Payment terms with a stated due date, an interest clause, and a retention of title clause if you supply goods; credit checks before extending terms to a new customer; deposits or staged payments on larger jobs; and invoices issued the day the work completes rather than at month end. Then make sure the terms were actually incorporated, by putting them in front of the customer at quote or order stage — terms first seen on the invoice bind nobody. A terms and conditions package starts at £695 +VAT. Late payment is usually a paperwork problem long before it becomes a collection problem.
Leave your email and we will come back to you with what a review would involve and what it would cost — agreed in writing before anything starts. Buzz Legal Ltd is not a firm of solicitors; reserved work goes to RHF Solicitors, SRA no. 324115.
Clear scope · fixed fees available. Buzz Legal Ltd is not a firm of solicitors and is not regulated by the SRA.