Ensure customers pay you on time

Claiming debt recovery costs on debts and payments


As well as charging interest under late payment legislation you can also claim costs for the recovery of late payments. There is an automatic and fixed compensation charge shown below, but you can also charge any reasonable additional costs of recovery where they exceed the basic compensation rate.

Amount of the debt Debt recovery cost you can charge
Up to £999.99 £40
£1,000 - £9,999.99 £70
£10,000 or more £100

However, before applying the charge, you should:

  • consider your relationship with the customer
  • get the opinion of customer-facing staff
  • assess your credit management system
  • find out the general industry practice

If you decide to apply the charge, you should notify the customer in writing. You should also send them a new invoice with the charge itemised as an additional amount and the outstanding total debt adjusted accordingly.

Purchasers cannot contract out of late payment legislation ie they cannot deny the supplier their right to, for example, charge statutory interest.