Late payment interest on invoices to the public sector

Public bodies must pay valid, undisputed invoices within 30 days. If one pays you late, you can claim statutory interest and fixed compensation, the same as with any business client [1][2].

The 30-day payment term

Under the Procurement Act 2023, every public contract a contracting authority enters into includes a term that it must pay any sum due within 30 days of receiving the invoice, or by the payment date on the invoice if that is later [1]. A contract term that tries to restrict or override this has no effect [1].

• The term doesn't apply if the authority considers the invoice invalid, or disputes it. It must tell you without undue delay if it does [1].
• It doesn't cover concession contracts, utilities contracts awarded by a private utility, or contracts awarded by a school [1].
• Contracts procured before the Act came into force on 24 February 2025 stay under the old rules [3]. Under those rules, regulation 113 of the Public Contracts Regulations 2015 requires public contracts to include a 30-day term for paying valid, undisputed invoices [4].

What makes an invoice valid

Under the Act, an invoice is valid if it is an electronic invoice in the required form, or if it shows at least [1]:

• the name of the business invoicing
• a description of the goods, services or works supplied
• the amount requested
• a unique identification number

It must also meet any other requirement in the contract, such as a purchase order number [1]. Check the contract before you send the invoice. The free invoice template has a field for each detail GOV.UK says an invoice must show.

Statutory interest and compensation

GOV.UK says a payment date agreed with a public authority must usually be within 30 days. If no date was agreed, payment is late 30 days after the customer gets the invoice, or after you deliver the goods or service if that's later [2].

Once a payment is late you can claim [5][6]:

• Statutory interest at 8% plus the Bank of England reference rate, currently 11.75% a year for debts that became late from 1 July 2026 to 31 December 2026
• Fixed compensation of £40 (under £1,000), £70 (£1,000 to £9,999.99) or £100 (£10,000 or more)

If your contract sets its own late-payment interest rate, that applies instead of the statutory rate [5]. Work out the interest and compensation with the calculator: enter the due date, which is the 30-day date unless the contract gives an earlier one.

Getting paid in practice

1. Confirm the invoice was received and is accepted as valid. If the authority says it's invalid or disputed, ask what needs correcting and reissue it.
2. Chase the authority's accounts payable team in writing, quoting the contract, invoice number, amount and due date, and add the interest and compensation you're claiming. How to chase an unpaid invoice.
3. Escalate. The Cabinet Office's Public Procurement Review Service accepts cases from suppliers about valid, undisputed invoices on public sector contracts that weren't paid within 30 days or the contract terms [7].
4. Court. As with any debt, you can make a county court claim. Statutory demand or county court claim?

Sources

1. Procurement Act 2023, section 68 (implied payment terms in public contracts)
2. GOV.UK: Late commercial payments: when a payment becomes late
3. GOV.UK: The Procurement Act 2023: a short guide for suppliers
4. The Public Contracts Regulations 2015, regulation 113
5. GOV.UK: Interest on late commercial payments
6. GOV.UK: Claim debt recovery costs
7. GOV.UK: Public Procurement Review Service progress report 2024-25

General information, not legal advice. Checked against GOV.UK and legislation.gov.uk on 3 October 2026. This covers public contracts in England; Scotland, Wales and Northern Ireland have their own procurement rules.