Your Legal Rights When Clients Don't Pay
As a freelancer or small business in the UK, you have strong legal protections when clients fail to pay on time. The Late Payment of Commercial Debts (Interest) Act 1998 gives you automatic rights to claim interest and compensation on overdue invoices.
Statutory Interest on Late Payments
When a business client doesn't pay by the agreed date, you're automatically entitled to charge:
- 8% above the Bank of England base rate — calculated daily from the due date
- Fixed compensation for the debt recovery cost
Fixed Compensation You Can Claim
In addition to interest, you can claim a fixed sum based on the invoice amount:
- £40 — for debts under £1,000
- £70 — for debts between £1,000 and £9,999.99
- £100 — for debts of £10,000 or more
Default Payment Period
If you haven't agreed specific payment terms with your client, the default payment period under UK law is 30 days for business-to-business transactions.
Step-by-Step: Recovering an Overdue Invoice
- Send a polite reminder — email the day after the due date
- Follow up by phone — sometimes invoices get lost
- Send a formal letter before action — state you'll pursue legal action
- Use the Small Claims Court — for amounts up to £10,000 in England and Wales
- Consider a debt collection agency — for persistent non-payers
Preventing Late Payments
The best strategy is prevention. Use invly to set up automatic payment reminders that email your client 3 days before an invoice is due — so they never have an excuse for forgetting.