Many small businesses don’t realise that they can charge their customers late payment fees, and they are an underused way to get paid more quickly. In fact, you don’t even have to put it in your terms or conditions or your contract, it’s a statutory right and the law in the UK.

For full guidance on how late payment fees work and how to calculate them, please refer to our detailed blog article:

1. Calculate the annual statutory interest

   • The statutory interest rate is 8% above the Bank of England’s base rate.

   • The base rate may change, so always check the rate that applies on the invoice due date.

2. Work out the daily interest

   • Divide the annual statutory interest by 365 to get the daily late payment fee.

3. Add a fixed compensation fee

   • You can charge a one-off compensation fee based on the invoice amount:

     • £40 for debts less than £1,000

     • £70 for debts between £1,000 and £10,000

     • £100 for debts of £10,000 or more

4. Calculate the total late fees

   • Multiply the daily late payment fee by the number of days the invoice is overdue.

   • Add the fixed compensation fee.

Formula:
Total fees = (daily late payment fee × days overdue) + compensation fee

To enable late payment fees to appear in your email templates, you will need to go to Credit Control-Additional Settings-Options and then Enable.

You can also set custom late fees parameters by going to Admin-Organisation-Options and click Edit in the Custom late payment fee box

From there you can select if you would like to add in a custom late payment fee.

This article provides step-by-step instructions, examples, statutory rules, and everything you need to understand the calculation process.

Who can I contact for help?

If you are still experiencing issues or have questions about your account, please reach out to our customer success team via the Satago Help Centre