Invoice becomes overdue
Check the agreed payment terms and confirm the due date before calculating interest.
GUIDANCE • LATE PAYMENT TOOL
Using the Late Payment Tool carefully
This guide explains how to use the calculator sensibly, why the calculation date matters, and why contract terms and current guidance should be checked before relying on the output.
WHAT THIS TOOL DOES
A practical estimate, not legal advice
The Late Payment Tool helps estimate late-payment interest, fixed recovery costs and a recovery letter draft for business-to-business overdue invoice situations.
It is designed as a practical support tool. It does not decide whether a claim is legally appropriate, whether your contract contains a different interest remedy, or whether you should take further action.
Important:
Check the contract terms, the current rules and the
circumstances before relying on the calculation or
sending a letter.
REMINDER TIMING
Update the calculation date before each follow-up
Interest may continue to accrue while an invoice remains unpaid. If several days pass between reminders, the calculation should be updated before copying the next letter.
Polite reminder
Use a current calculation date before copying the first reminder. The figure should reflect the date you are sending it.
Firm reminder
If time has passed since the first message, update the calculation date because interest may have increased.
Final notice
Recalculate before sending a final notice so the days overdue, interest and total are up to date.
COMPENSATION BANDS
Fixed recovery costs
The fixed recovery cost is based on the size of the unpaid debt. The calculator applies the band from the invoice amount entered.
Up to £999.99 £40
£1,000 to £9,999.99 £70
£10,000 or more £100
These bands reflect GOV.UK guidance for claiming debt recovery costs on late commercial payments. Check the current guidance before relying on the figures.
CONTRACT TERMS
Check whether the contract says something different
The calculator asks for an annual interest rate manually. This is deliberate. Users should check the rate they intend to apply rather than relying on a hard-coded figure.
If the contract contains a different interest rate or late-payment remedy, that may affect whether statutory interest should be used.
Practical check:
Before sending a letter, check the invoice terms,
engagement letter, contract, purchase order or any
agreed payment terms.
LIMITATIONS
What this tool does not do
It does not give legal advice
The calculator provides general information and a draft wording structure only.
It does not check your contract
Users remain responsible for checking whether contract terms change the interest or recovery position.
It does not decide whether to pursue a debt
The decision to send a reminder, final notice or pursue recovery action should be made carefully.
RETURN TO TOOL
Ready to calculate?
Use the calculator with the correct invoice details, dates and interest rate, then review the generated letter before sending.
Open Late Payment Tool