This Act matters for businesses chasing unpaid invoices and for businesses setting payment terms with suppliers. It can affect interest, compensation and the commercial tone of debt recovery. The practical move is to make payment terms clear and escalate overdue invoices before they become relationship-breaking disputes.
Main laws
United Kingdom Act
Late Payment of Commercial Debts (Interest) Act 1998
The Late Payment of Commercial Debts (Interest) Act 1998 gives rights connected to late payment in many business-to-business debts.
In forceUnited KingdomPlain-English guide4 practical checks
Plain-English explainers, not legal advice. Use the linked official source for section-level detail, and get advice for your situation.
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Quick read
- This Act matters for businesses chasing unpaid invoices and for businesses setting payment terms with suppliers.
- It can affect interest, compensation and the commercial tone of debt recovery.
Likely relevant if
- Businesses invoicing other businesses
- Suppliers with recurring unpaid invoices
- Agencies and consultants
Check first
- Set clear payment dates and invoice terms
- Track overdue invoices consistently
- Check contractual interest clauses against statutory rights
What this means in practice
Key points
- Late payment rights are most useful when the invoice and work record are clean.
- Interest wording should be commercially deliberate, not copied without thought.
- A good escalation process often recovers cash before legal action is needed.
When this law usually matters
Most businesses do not need to memorise the whole law. The useful starting point is to know when it is likely to affect a contract, customer journey, employee process, data flow or company decision.
Key points
- Businesses invoicing other businesses
- Suppliers with recurring unpaid invoices
- Agencies and consultants
- Credit controllers and finance teams
What to check first
Sense check
- Set clear payment dates and invoice terms
- Track overdue invoices consistently
- Check contractual interest clauses against statutory rights
- Keep delivery and acceptance evidence for disputed invoices
Documents and workflows to review
Key points
- Terms of business
- Invoice template
- Debt recovery process
- Delivery records
- Supplier payment policy