Late payment compensation: £40, £70 or £100 per invoice
Once statutory interest starts to run on a qualifying business debt, the supplier is also entitled to a fixed sum, under section 5A of the Late Payment of Commercial Debts (Interest) Act 1998. GOV.UK sets out the amounts on Claim debt recovery costs on late payments:
| Amount of debt | Fixed sum |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
GOV.UK says you can only charge the business once for each payment. If your reasonable recovery costs are higher than the fixed sum, the Act also allows you to claim the difference.
The manual way in Xero
Xero doesn’t add this for you. The usual approach is a new sales invoice for the customer, with one line per late invoice naming the invoice and the amount, alongside any interest.
What Lateby does
- Under Fixed sum per late invoice, choose UK statutory £40 / £70 / £100. Lateby adds one line per late invoice, with the band picked from the amount still due on that invoice in your export.
- The fixed sum is added only once per invoice: on the run where the invoice first becomes chargeable. Later monthly runs charge further interest only.
- The UK fixed sums apply only to GBP invoices. If your file has no Currency column, Lateby assumes GBP and warns you.
- Prefer your own fee? Choose A fixed fee and enter the amount from your terms instead.
- The lines go into the same draft interest invoice per customer in the Xero import file, and onto the PDF notice.
What to check
- For a part-paid invoice, Lateby picks the band from what is still due, which can be lower than the original debt. Check those lines before you approve the drafts in Xero.
- The fixed sum and statutory interest apply to business customers only. See how the statutory rate is set.
Lateby is a calculator, not legal advice. Charge interest only where your terms or the law allow it, and only to business customers: interest on consumer debts is regulated differently.
Try it on your own invoice export. Free, no sign-up, nothing uploaded. Interest is worked out for every customer; the Xero import file and PDF notices cover the first 3 customers charged in each batch. The Practice plan ($19 per month or $190 per year) covers every customer: see pricing.
Work out interestMore guides
- Add interest to late invoices in Xero
- UK statutory late payment interest: 8% plus Bank Rate
- Record late-payment interest in Xero as Interest Income
Lateby is independent and not affiliated with or endorsed by Xero. Xero is a trademark of Xero Limited. This guide was checked against the linked sources on 27 October 2026; Xero changes its product, so check the current Xero Central article if a menu looks different.