Late payment letter template
A late payment letter chases a business customer for an overdue invoice and sets out what the law allows you to claim: statutory interest, fixed compensation and reasonable recovery costs. It comes as a first reminder or a final demand, with a statement of account. A supplier sends one each time a business customer's invoice goes unpaid past its due date.
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What changes each time
19 values. Everything else is your wording, kept exactly.
You and your customer
- Your business name
- Customer's business name
- Customer contact's name
- Letter date
The overdue invoice
- Invoice number
- Invoice date
- Invoice amount
- Due date
- Amount outstanding
- Amount part paid
Interest and compensation
- Interest rate
- Base rate used
- Daily interest amount
- Fixed compensation
- Recovery costs
What happens next
- Payment deadline
- Next step
- Bank details for payment
Signing
- Signatory name and position
The rules it usually needs
Written in plain English when the template is set up.
- One of several wordings
“Send a first reminder, or a final demand with statutory interest.”
The heading and the body of the letter read as the chosen stage.
- Only when…
“Include the earlier reminders only when the letter is a final demand”
The dates of the earlier reminders are named.
- Only when…
“Include the part-payment sentence only when the invoice has been part paid”
The amount and date of the payment received appear.
- One of several wordings
“Claim fixed compensation of £40, £70 or £100 according to the size of the debt.”
Only the amount for the debt's size appears.
- Only when…
“Include reasonable costs of recovery only when they are claimed”
The row appears with the description and amount.
- Only when…
“Include a list of the overdue invoices only when there are several”
A table appears with one row per invoice, with days overdue and interest.
- Once for each item
“One row for each overdue invoice.”
The statement of account gets a row per invoice with its amount, due date, days late and interest.
- Only when…
“Include contractual interest wording only when the contract has its own late payment interest clause”
The statutory interest row is replaced by a claim at the contractual rate under the stated clause.
- One of several wordings
“State the next step as starting court proceedings, passing the debt to a collection agency or solicitors, or suspending work and supply.”
The final paragraph reads as the chosen option.
- Only when…
“Include a mention of the Small Business Commissioner only when it is relevant”
The reference to referring the matter appears.
- Only when…
“Include a pre-action protocol sentence only when the customer is an individual or sole trader”
The sentence promising a letter of claim before court proceedings appears.
Questions people ask
What is a late payment letter?
A letter to a customer whose invoice has not been paid by its due date, asking for payment and setting out any interest and compensation you are claiming.
Can I charge interest on a late business invoice?
In business-to-business contracts the Late Payment of Commercial Debts (Interest) Act 1998 gives a right to statutory interest unless the contract has its own substantial remedy. The letter lets you claim either.
How much fixed compensation can I claim?
The amount depends on the size of the debt: £40 for debts under £1,000, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more.
Should I send a reminder or a final demand?
Most people send a friendly reminder first, then a final demand if nothing happens. The template supports both.
Does this work for invoices to consumers?
No. It is written for invoices between businesses. Consumers are treated differently.
Use this template
It opens in DocuWeave as a template you can check, change and publish. Nothing is used until you do.