For a founder, director or finance manager, a late invoice is a loan you did not agree to make. The law gives you a remedy, but interest accrues slowly and arrives after the cash gap has already bitten. The forecast is where you protect yourself.
When a payment is late
GOV.UK says that if you agree a payment date, it must usually be within 60 days for business transactions, or 30 days for public authorities. You can agree longer than 60 days between businesses, but it must be fair to both. If you do not agree a date, the payment is late 30 days after the customer gets the invoice or you deliver the goods or service, whichever is later.
What you can claim
- Statutory interest of 8% plus the Bank of England base rate for business-to-business transactions. It does not apply if your contract sets a different rate.
- A fixed sum for recovery costs: £40 up to £999.99, £70 from £1,000 to £9,999.99, £100 at £10,000 or more. You can charge once per payment.
- As a supplier, reasonable costs each time you try to recover the debt.
GOV.UK's own example uses a £1,000 debt at a 0.5% base rate: annual interest £85, or about 23p a day. The interest is real but small next to the cash you are missing. Send a new invoice if you decide to add interest.
Why the forecast matters more
Take a fictional company with £35,000 opening cash. In the base case it never drops below £7,800 and ends week 13 at £9,200. Now let customers pay 2 weeks late and cut receipts by 15%. It ends week 13 at -£42,550, and the cash buffer is first breached in week 4. Statutory interest on a few late invoices would not cover a swing of £51,750.
The numbers are illustrative only. The point is the method: change payment timing first, then volume, and note the week the buffer first breaks. That week is your decision deadline. Our 13-week cash flow guide shows the full walkthrough.
Practical steps
- Record each major customer's actual days-to-pay, not their terms.
- Forecast receipts on actual behaviour, with a slower scenario beside it.
- Set payment terms and late-payment interest in your contracts, since a contract rate overrides the statutory one.
- Invoice promptly. A late invoice makes everything after it late.
General information, not financial, tax or legal advice. The forecast example is fictional. Official guidance checked on 13 October 2026. For a specific dispute, take professional advice.
A template for this
Practical Finance has built an editable 13-week Excel forecast with a fictional worked example, a blank workbook, a delayed-payment stress test and a cash-buffer dashboard. This article promotes a Practical Finance tool.