What is statutory interest?
Statutory interest is a legally guaranteed interest rate you can charge on overdue B2B invoices — even without a contract. It's set by law in the UK, EU, and most developed economies to discourage late payment to small businesses.
UK: Late Payment of Commercial Debts Act
The UK Late Payment of Commercial Debts (Interest) Act 1998 entitles you to:
- Statutory interest: 8% above the Bank of England base rate (currently around 12.75% total in 2026)
- Fixed compensation for late payment, scaled by debt size:
- £40 if the debt is up to £999.99
- £70 if the debt is £1,000 to £9,999.99
- £100 if the debt is £10,000 or more
- Reasonable costs of recovering the debt above the fixed amount
You can claim these without needing a contract clause. You simply add them to a follow-up invoice once the original is overdue.
EU: Late Payment Directive (2011/7/EU)
The EU Late Payment Directive provides similar protections across all 27 member states:
- Statutory interest of 8% above the ECB reference rate
- A minimum recovery cost of €40
- Maximum payment terms of 60 days for businesses, 30 days for public authorities
USA: standard practice
The US has no federal late payment law. Standard industry practice:
- 1.5% per month (18% annualized) is the most common rate
- Some states cap maximum interest (usury laws) — check your state
- You can only charge the rate if it's stated on the original invoice or contract
How to claim late payment interest
- Wait until the invoice is officially overdue — even by one day
- Calculate the interest and compensation using this calculator
- Send a follow-up invoice for the original amount + interest + compensation
- Reference the relevant law in your demand letter ("under section 5A of the Late Payment Act 1998…")
- Be prepared to follow through — small claims court if necessary. Most businesses pay once they realize you're serious.
💡 Pro tip: Even if you don't actually plan to claim the interest, mentioning it in a polite follow-up email often gets the original invoice paid faster. Most businesses know the rules and would rather pay you on time than dispute statutory interest.
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