Late payment compensation for UK businesses

• Cash flow challenge: Some customers regularly pay my invoices late, and it’s putting serious pressure on my finances, even when I’ve delivered the goods or services on time.

• Perfect for: UK businesses seeking ways to recover lost funds when clients fail to pay promptly and to deter future delays.

Novuna helps businesses manage the financial impact of late payments, whether that’s through claiming compensation or securing funding to bridge the gap by comparing in-house and market solutions to find the best fit for your business.

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What compensation can I claim for late invoice payments?

In the UK, businesses can claim compensation if a customer pays late. The compensation is a flat fee per invoice, depending on its value:

• Up to £1,000 → £40 compensation
• £1,000 to £9,999 → £70 compensation
• £10,000 and above → £100 compensation

You may also be entitled to interest on top, calculated at 8% above the Bank of England base rate. This applies from the day after the payment was due until it’s paid, unless your contract already specifies a different rate.

When can you claim compensation?

You can claim if:

• You’ve supplied goods or services to a business customer.
• The invoice hasn’t been paid by the agreed due date.
• Your terms don’t already include compensation or an interest clause.

Even if your client eventually pays, the compensation (and interest, if applicable) still applies. This helps offset late payment impact and signals that payment delays aren’t acceptable.

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How to apply compensation fairly and effectively

The process is straightforward:

1. Include clear terms: State your compensation policy on all invoices and contracts.
   
   

2. Send a polite reminder: If payment is late, follow up and include the compensation amount as a separate line item.
   
   

3. Stay professional: Quote the compensation amount, explain why it applies, and offer a straightforward path to payment resolution.

What if compensation doesn’t fix the cashflow gap?

Compensation can help, but it may not immediately fill your cash flow hole. You can supplement compensation with:

• Invoice finance: access funds tied up in unpaid invoices quickly.

• Short-term cash flow funding: to tide you over while waiting on client payments.

• Credit control support: to reduce future delays and improve collection performance.

How Novuna Business Cash Flow can help

Novuna helps you map the full late payment landscape by combining recovery strategies with funding solutions when needed. Whether you want to claim compensation or unlock funds faster, we’ll work with you to find a tailored, effective approach.