The Late Payment Clock — Watch the True Cost of Unpaid Invoices Tick Upwards
UK businesses spend 133 million hours a year chasing late payments. The average cost to a small business is over £22,000 annually. This tool shows you the real cost of your overdue invoices — including statutory interest, fixed compensation, chasing costs, and lost opportunity — ticking upwards in real time.
How to use
Enter the average amount of your overdue invoices, how many days overdue they are, and how many invoices are affected. Then watch the clock tick through each day and see the total cost accumulate. The breakdown shows exactly where the cost comes from: statutory interest, legal compensation, your time spent chasing, and the opportunity cost of not having that cash.
Understanding Your Late Payment Costs
Late payment costs more than just the interest. The Late Payment of Commercial Debts Act gives you the right to charge statutory interest plus fixed compensation on overdue business-to-business invoices. On top of that, the time you spend chasing payments has a real cost, and the cash sitting in your client's account rather than yours has an opportunity cost. Most small businesses never claim what they are entitled to.
Frequently Asked Questions
Can I charge interest on late invoices?
Yes. The Late Payment of Commercial Debts (Interest) Act 1998 gives businesses the right to charge statutory interest on overdue invoices at 8% above the Bank of England base rate. This applies automatically to business-to-business transactions. You do not need to include a clause in your terms, though it helps to reference it.
What is the fixed compensation for late payment?
In addition to interest, you can claim fixed compensation for each overdue invoice: 40 pounds for debts under 1,000 pounds, 70 pounds for debts between 1,000 and 9,999 pounds, and 100 pounds for debts of 10,000 pounds or more. This is per invoice, not per payment.
How do I reduce late payments from clients?
Invoice promptly on the day work is completed. State clear payment terms on every invoice. Send reminders 7 days before and on the due date. Follow up immediately when payment is late, not weeks later. Consider offering a small discount for early payment. And be prepared to enforce your rights, as clients who know you will chase are more likely to pay on time.
What is the average payment time for UK businesses?
The average payment term in the UK is 30 days, but the average actual payment time is closer to 45-50 days. For SMEs dealing with larger businesses, it can be even longer. The Prompt Payment Code exists to encourage better practice, but compliance is voluntary.
Should I stop working for clients who pay late?
That depends on the value of the relationship and the severity of the problem. A client who consistently pays 60-90 days late is using your cash as interest-free finance. Calculate the true cost using this tool. If the cost exceeds your profit on their work, you are effectively paying them to be your client.
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