Every haulage business knows the customer who pays at ninety days on thirty-day terms. Fewer use the machinery Parliament built for exactly that situation. The late commercial payments regime gives suppliers statutory interest, fixed-sum compensation and a fairness check on payment terms - and none of it needs to be in your contract to apply.
The guidance on late commercial payments sets the default clock: if you agree a payment date, it must usually be within 30 days for public authorities or 60 days for business transactions. You can agree a longer period than 60 days for business transactions - but it must be fair to both businesses. That fairness proviso is the quiet powerhouse: a one-sided 120-day term imposed by a dominant customer is precisely the thing it exists to challenge. If no payment date is agreed, the law’s default rules decide when payment becomes late, and from that moment the supplier’s remedies start.
Once a business is late paying for goods or a service, the supplier can claim statutory interest - 8% plus the Bank of England base rate for business-to-business transactions. Two boundary rules matter. You cannot claim statutory interest if the contract already sets a different rate of interest, which is why some customers’ standard terms include a low contractual rate - read the small print before assuming the statutory rate is yours. And you cannot be held to a lower interest rate in a contract with a public authority.
The arithmetic is simple enough to run on any invoice. The guidance’s own example: owed £1,000 with the base rate at 0.5%, annual statutory interest is £85 (1,000 x 0.085), which is 23 pence a day, or £11.50 after 50 days late. Scale that to a haulage ledger - forty invoices of £4,000 each, all drifting 60 days past terms - and the interest alone becomes a number worth a monthly routine.
The 60-day ceiling for business transactions deserves a second look, because it is the part of the regime big customers test hardest. Terms longer than 60 days are permitted only if the extension is fair to both businesses - and fairness, in a negotiation between a national retailer and a twenty-truck haulier, is not a symmetrical conversation. The regime’s value to the smaller side is that it puts the question in writing: a term can be challenged as unfair even when the supplier signed it. Most hauliers will never litigate the point, but many will find the invoice conversation easier once both sides know the question exists.
Interest is only half of it. Section 5A of the Late Payment of Commercial Debts (Interest) Act 1998 entitles the supplier to a fixed sum in addition to statutory interest, once interest begins to run on a qualifying debt: £40 for a debt under £1,000, £70 for a debt of £1,000 or more but under £10,000, and £100 for a debt of £10,000 or more. And if the supplier’s reasonable costs of recovering the debt exceed the fixed sum, the supplier is entitled to the difference as well. The obligation to pay is treated as part of the contract creating the debt - the customer signed up to it by buying, whether or not anyone mentioned it.
The commercial reality of haulage is that the habitual late payer is often also the biggest account, so the remedy needs a process rather than a temper. The fleets that handle this well state payment terms on every quote and invoice, run the ageing review weekly, escalate in stages - statement, reminder, notice that statutory interest and fixed-sum compensation are now being claimed - and reserve actual claims for the accounts that need them. The point of the regime is leverage: a customer who knows the supplier understands section 5A pays noticeably faster than one who thinks the invoice is a suggestion. The law has already written your late-payment policy; you only have to quote it.
The late-payment regime rewards businesses that systematise it. Put the payment terms on the quote, the order confirmation and the invoice; diarise the ageing review; template the three-letter escalation so the final notice - the one that mentions statutory interest at 8% plus base and the section 5A fixed sum - goes out without a meeting. None of this is aggressive; it is simply using the default rules of British business, which exist precisely because late payment strangles small suppliers. The customers worth keeping respect a supplier who invoices like a professional and chases like one too.