Can a sourcing company charge late-payment interest?
Yes, a UK sourcing company may claim interest and recovery costs on a late business payment. Check when payment became due, whether the demand relies on contractual or statutory terms, and how each charge was calculated. Request the order records and a written reconciliation from Cambridge China Bridge.
Identify the invoice and the agreed payment trigger
Match the demand to the contracting company, accepted quote, order acknowledgement and invoice. Separate charges for goods, sourcing work, samples and freight so you can see what remains unpaid. For an overseas order, ask a solicitor to confirm whether the UK rules described here apply to the contract.
Find the agreed payment date or milestone, such as shipment or inspection approval, and the evidence that it occurred. Ask the company to identify the document supporting its due date. Our sourcing terms guide helps you organise the accepted documents and any conflicting wording.
Check when the payment became late
Government guidance says agreed business payment periods should usually be within 60 days. A longer period can be agreed if it is fair to both businesses. Check the actual agreed deadline rather than treating that guidance as permission to postpone an earlier payment date.
Where no payment date was agreed, government guidance says payment becomes late 30 days after receipt of the invoice or delivery of the goods or service, whichever is later. Keep invoice receipt and performance records. If inspection or acceptance affects the timing, ask a solicitor to check the relevant wording before accepting the claimed start date.
Separate contractual charges from statutory interest
Ask whether the company is claiming under an agreed interest clause or the statutory rules. Government guidance describes statutory business interest as 8% plus the Bank of England base rate. Its detailed guidance explains that an agreed alternative must amount to a substantial remedy to displace statutory interest. Have a solicitor assess a questionable clause.
Request the unpaid principal, annual rate, relevant base or reference rate, start and end dates, and calculation. Check that payments and agreed credits appear in the reconciliation. For a contractual administration or collection charge, ask for the accepted clause and its calculation. Ask the company to explain any overlap between contractual and statutory charges.
Check fixed compensation and additional recovery costs
Government guidance allows fixed recovery compensation on top of interest for a late commercial payment. The amount depends on the debt, as shown below. The fixed charge can only be applied once for each payment. Check repeated demands for the same payment rather than assuming every reminder attracts another fixed charge.
Additional reasonable recovery costs may be claimed where the fixed sum does not cover them. Request an itemised explanation, supporting records and a reconciliation showing how the fixed compensation has been taken into account. Query unexplained collection fees and duplicated costs.
| Debt amount | Fixed compensation |
|---|---|
| Less than £1,000 | £40 |
| £1,000 or more but less than £10,000 | £70 |
| £10,000 or more | £100 |
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Challenge the specific error in writing
Identify the invoice and disputed charge, explain the error and attach the relevant document or payment record. Ask for a corrected calculation and written response. Useful wording is: “Please identify the agreed due date and charging basis, reconcile payments and credits, and explain the interest period and recovery costs.” Request written agreement on any temporary payment arrangement and treatment of charges.
Separate the undisputed balance from the disputed additions. If faulty goods are also involved, use our withholding payment guide before making deductions. Do not assume a dispute notice stops charges. If the demand remains unresolved, follow our supplier dispute guide and obtain legal advice on entitlement and your response.
Frequently asked questions
Can late-payment charges apply to a small order?
They may apply to a late business payment for goods or services. Check the due date, the contractual or statutory basis, and the calculation rather than relying on the order being small.
When is an invoice late if no date was agreed?
Government guidance says 30 days after invoice receipt or delivery of the goods or service, whichever is later. Ask for advice if inspection or acceptance arrangements affect the timing.
Can a supplier add a fixed recovery fee to every reminder?
Government guidance allows the fixed charge only once for each payment. Ask the supplier to identify the payment behind each charge and remove duplicates.
How do I dispute incorrect late-payment interest?
Write with the invoice reference, disputed amount and supporting records. Request the due-date evidence, charging basis and calculation, including payments and credits. Ask for a corrected demand.