How to Claim Late Payment Compensation UK (Step-by-Step)

Step-by-Step Guide to Recovering What You’re Owed

Many tradespeople and small business owners are hesitant to claim compensation for fear of losing clients. However, claiming what you are legally entitled to is a standard business practice that signals you are a serious professional. This guide walks you through the process of claiming fixed compensation and interest under UK law.

Step 1: Calculate Your Entitlement

The compensation you can claim depends on the size of the unpaid invoice as shown above. In addition, calculate the interest (8% plus the Bank of England base rate) from the day the invoice became overdue. For help with the math, see our interest calculator guide.

Step 2: Issue a Revised Invoice or Statement

The most professional way to claim is to issue a "Statement of Account" that shows the original invoice amount, the statutory interest accrued to date, and the fixed compensation fee. This provides a clear, audit-ready trail for the client's finance department.

Step 3: Automate the Process to Remove Friction

The biggest barrier to claiming is the manual effort and the perceived "awkwardness." By using InvoiceChasr, you can automate the calculation and inclusion of these fees in your final reminder sequence. This removes the personal element and ensures you are compensated for the time and stress of chasing late payments, all while maintaining a professional distance.

If the client still refuses to pay, your next step may be taking them to small claims court.