How to Legally Calculate Interest on Late Commercial Payments

The 8% + Base Rate Rule: Understanding Your Rights

In the UK, the statutory interest you can charge another business is 8% plus the Bank of England base rate. This is a powerful legal right designed to compensate you for the time your money is sitting in someone else's account. But how do you actually calculate that on a £2,450 invoice that is 14 days late? Understanding the math is the first step to enforcing your rights.

The Formula for Statutory Interest

The calculation is simpler than it looks: (Debt x Interest Rate x Number of Days Late) / 365

When and How to Apply Interest

You don't always have to charge the interest, but having the right to charge it is a powerful negotiation tool. Simply mentioning in your "Firm" reminder that "Statutory interest of £X.XX has accrued" is often enough to move your invoice to the top of the pile. It signals that you are aware of your legal rights and that the cost of delaying payment is increasing every day.

Professional Enforcement with Automation

Using InvoiceChasr, you can customize your reminder templates to mention these legal rights as the invoice ages. This provides a professional and legal basis for your persistence without you having to manually calculate the interest or write the awkward emails yourself. It turns a legal right into a practical business tool for faster payment.