Often yes — but it depends who the customer is. If your customer is a business, you have a statutory right to charge interest and fixed compensation on late payment. If they're a domestic (consumer) customer, you can only charge interest if your contract says so, or claim it through the courts. Either way, spell it out in your terms.
Charging interest is both a deterrent and fair compensation for being kept out of your money. The rules split depending on whether you're dealing with a business or a private customer.
If your customer is a business (B2B)
Under the Late Payment of Commercial Debts (Interest) Act 1998, you have a statutory right to charge a late-paying business:
- Statutory interest of 8% plus the Bank of England base rate, on the overdue amount.
- Fixed compensation per invoice, on a sliding scale by debt size (a set fee for smaller debts, rising for larger ones).
- Reasonable recovery costs above that fixed sum if they exceed it.
You can claim this even if your contract is silent — it's a statutory right for commercial debts.
If your customer is a consumer (domestic)
Most tradespeople's customers are private householders, and the 1998 Act doesn't apply to them. With consumers you can charge interest only if:
- Your contract / terms include a clear, fair late-payment interest clause that the customer agreed to, or
- You claim interest through the courts, which can award it on a judgment.
How to actually apply it
Don't spring it as a surprise. Make sure the interest term is on the quote the customer accepted, then reference it on the invoice and in your reminders. Showing the figure — and that you're entitled to it — often gets the main bill paid quickly.