What Is a Late Payment Compensation Claim?
Did you know that, under UK law, your business may be entitled to compensation if you've received late payments from the public sector? Many companies aren't aware of this entitlement, or that there's a straightforward way to act on it.
According to a 2025 study commissioned by the Department for Business and Trade, more than one in four UK businesses are affected by late payments each year, costing the economy almost £11 billion annually.
Source: Department for Business and Trade / London Economics, July 2025Late payments can significantly impact your business. Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses that have supplied the public sector may be owed statutory interest and fixed compensation on overdue invoices. At latepaymentaction.com, we buy those rights outright, paying you a fixed, guaranteed sum on completion and taking full responsibility for the claim from that point.
Am I eligible to claim?This guide covers everything you need to know:
- What is a late payment compensation claim?
- Who is eligible?
- How the process works
What is a late payment compensation claim?
A late payment compensation claim (also known as a late payment interest or late payment penalty claim) is a legal right that allows businesses to seek compensation for overdue public sector payments. In the UK, this right is established by the Late Payment of Commercial Debts (Interest) Act 1998.
The Act recognises the damage delayed payments cause to businesses and provides statutory protection for suppliers of goods and services to the public sector.
Eligibility
To be eligible for a late payment compensation claim, you must be a supplier and the debtor must be a public authority, contracting authority, or another type of business. You must also have received payment outside the 30-day period specified by the legislation.
Find out whether your business qualifies: Are you entitled to late payment compensation?
Am I eligible to claim?The claim process
LPA doesn't manage claims on your behalf. We buy them outright. Tell us your company details and we'll assess whether you have a claim. If you do, we make you a fixed, guaranteed offer. You sign our standard assignment documents, confirm your bank details, and we pay you within 24 hours. Your involvement ends there.
See exactly how the process works: Late Payment Compensation Claim Process: How It Works
Fixed compensation
Under the Act, suppliers are entitled to both statutory interest (calculated daily at 8% above the Bank of England base rate) and a fixed compensation amount per overdue invoice: £40, £70, or £100 depending on the value of the debt. For invoices with significant balances or long overdue periods, the totals can reach several thousand pounds.
Your entitlement applies even if the invoice has already been paid. If a public sector client paid you late at any point in the last six years (or five years in Scotland), you may still have a live claim. Find out more about claiming on paid invoices.
Use our free calculator to get an indicative figure for your situation.
What's my claim worth?Disputes
Once LPA purchases your claim, it belongs to us. Any dispute with the public sector organisation is handled entirely by our team. You have no ongoing involvement and no exposure.
Legislation
The primary legislation governing late payment compensation is the Late Payment of Commercial Debts (Interest) Act 1998. You don't need to understand its details to work with us, but if you'd like to read further, our resource hub covers the key provisions in plain language.
Find out more about the legislationStaying informed
The Procurement Act 2023, which came into force in February 2025, has strengthened suppliers' rights in public sector contracts. We cover the latest developments on our insights hub, worth checking if you want to stay current on your entitlements.
How to make a late payment compensation claim
Start with the eligibility checker to confirm you have a valid entitlement. If you do, the calculator will give you an indicative value. From there, all we need is your company details and we do the rest.
If you have questions at any stage, the team is easy to reach.
Your right to claim is time-limited. In England, Wales, and Northern Ireland you have six years from the date payment was received. In Scotland the period is five years. Find out more about the time limits that apply.
Talk to the teamFrequently asked questions
What is a late payment compensation claim?
A late payment compensation claim is a legal right established by the Late Payment of Commercial Debts (Interest) Act 1998. It allows businesses that have supplied the public sector to claim statutory interest and fixed compensation on invoices paid outside the 30-day payment window, even after the invoice has been settled.
Who can make a late payment compensation claim?
Any UK business that has supplied goods or services to a public sector body, including councils, NHS trusts, central government departments, and housing associations, and received payment outside the 30-day statutory period.
How much compensation can I claim?
Fixed compensation is £40 per invoice for debts under £1,000, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more. Statutory interest accrues separately at 8% above the Bank of England base rate.
Is there a time limit for claiming?
Yes. In England, Wales, and Northern Ireland you have six years from the date payment was received. In Scotland the period is five years.
Do I need to produce invoices to make a claim?
Not with LPA. We carry out our own assessment using company and payment records. You do not need to locate or submit invoices to start the process.
A final word on late payment compensation claims
If your business has supplied the public sector and received late payments, you may have a financial entitlement you haven't acted on. LPA exists to turn that entitlement into a guaranteed payment, quickly and without any ongoing obligation on your part.
Have you received late payments from the public sector?
Talk to the team
