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A Late Payment Letter is a formal written demand sent by a creditor to a debtor when a B2B invoice is overdue. It cites the unpaid invoice, claims statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998, and sets a deadline for payment before escalation.
When a B2B invoice is past its due date and the standard chasers (reminder emails, calls) have not produced payment. The Late Payment Act 1998 gives B2B creditors automatic statutory rights to interest at 8% above the Bank of England base rate plus a fixed compensation sum. Those rights arise automatically as a term implied into the contract (section 1), and the fixed sum is due as soon as interest starts to run (section 5A); the letter is how you claim them.
The unpaid invoice details, the contractual or statutory due date, statutory interest calculation, fixed compensation (£40, £70 or £100 depending on invoice size), debt recovery costs, payment deadline, and an explicit warning that escalation to a Letter Before Action and county court proceedings will follow non-payment.
The first letter can be polite and still be formal: identify the invoice, the amount and the due date, and give a date for payment. If it is ignored, the second should be firm: the same facts, the full amount now claimed, and a statement that a letter before action will follow. Keep both factual, because either may later be read by a judge.
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