Are You Entitled to Late Payment Compensation? What You Need to Know
Cash flow is vital for any business. Getting paid on time is not just convenient, for many it is the difference between stability and financial distress. Under UK law, if you supply the public sector and have received late payments, you may be entitled to statutory compensation. Yet many businesses with a genuine entitlement never act on it, either because they don't know it exists or because the process seems too complicated to be worth pursuing.
This guide covers who qualifies, what you are entitled to, and how to turn that entitlement into a guaranteed payment with no ongoing obligations. For a full overview of what a late payment compensation claim involves, see our dedicated guide.
What Is Late Payment Compensation?
Late payment compensation is a right established by the Late Payment of Commercial Debts (Interest) Act 1998. The Act requires public bodies and contracting authorities to pay undisputed invoices within 30 days. When they fail to do so, suppliers become entitled to statutory interest on the overdue amount and a fixed sum per invoice.
The entitlement applies regardless of whether the invoice has since been paid. If a public sector client paid you late, even years ago, the compensation rights may still be live. Find out about claiming on invoices already settled
Find out how the legislation protects your business
Who Is Eligible?
To be eligible for a late payment compensation claim, you need to meet a straightforward set of criteria:
- You are a supplier of goods or services
- Your client is a public sector body or contracting authority (councils, NHS trusts, central government departments, housing associations, further education colleges)
- The invoice was undisputed
- Payment was received outside the 30-day period set out in the Act
You do not need to produce invoices or supporting documentation to work with LPA. We carry out our own assessment using company and payment records.
Am I eligible to claim?What Are You Entitled to?
The entitlement under the 1998 Act has two components.
Statutory interest is calculated daily at 8% above the Bank of England base rate, from the day after payment was due to the date it was actually received.
Fixed compensation applies per overdue invoice: £40 for debts under £1,000, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more.
On individual invoices, these figures may seem modest. But across multiple invoices, longer overdue periods, or larger contract values, the total entitlement can reach several thousand pounds.
What's my claim worth?How the Process Works
LPA doesn't pursue claims on your behalf. We buy your statutory late payment rights outright, pay you a fixed guaranteed sum on completion, and take full responsibility for the claim from that point.
Step 1: Tell us your company details. That's all we need to get started. (Takes minutes)
Step 2: We check our records to assess whether you have a claim. (No input required from you)
Step 3: If you have a claim, we offer you a fixed, guaranteed purchase price. (Fixed amount, agreed upfront)
Step 4: We send our standard-form assignment documents for signature and ask you to confirm your bank details. (Straightforward documentation)
Step 5: Once in receipt of the signed documents and bank details, we make payment within 24 hours and your involvement is over. We then take full responsibility for the claims. (Immediate payment, zero ongoing obligations)
How Long Do You Have to Claim?
Your entitlement is time-limited. In England, Wales, and Northern Ireland, the limitation period is six years from the date payment was actually received, not the invoice date. In Scotland, the period is five years. Once the limitation period passes, the right to claim is extinguished.
If you have historical late payments from public sector clients, it is worth checking your eligibility now rather than later. Find out more about the time limits that apply
A Common Concern: Client Relationships
A frequent reason businesses don't pursue a late payment entitlement is concern about damaging an ongoing relationship with a public sector client. Because LPA buys the claim outright, your business is not the party making demands. Once the rights are assigned to us, we pursue the claim independently. Your client relationship remains yours to manage.
You can find answers to further questions, including how we handle client notification, on our Business FAQs page.
Ready to Find Out If You Qualify?
If your business has supplied the public sector and received payments outside the 30-day period at any point in the last six years (or five years in Scotland), you may have an entitlement you haven't yet acted on. LPA exists to turn that entitlement into a guaranteed payment, with no complexity and no ongoing obligation on your part.
Am I eligible to claim?Frequently Asked Questions
Am I entitled to late payment compensation?
If you have supplied goods or services to a public sector body and received payment outside the 30-day statutory period, you are likely entitled to compensation under the Late Payment of Commercial Debts (Interest) Act 1998. Use the eligibility checker to confirm in minutes.
Do I need a formal contract to claim?
No. A formal contract is not required, though the process is more straightforward where payment terms have been agreed in writing.
What if the invoice has already been paid?
Your entitlement survives the payment. If a public sector client paid you late, even years ago, you may still have a live claim provided you are within the limitation period: six years in England, Wales, and Northern Ireland; five years in Scotland.
Can I claim for multiple invoices?
Yes. You can claim on every invoice that was paid late, provided each relates to a separate order of goods or services. LPA assesses each invoice individually and combines them into a single purchase price.
How do I find out if my client counts as a public sector body?
Contracting authorities include local councils, NHS trusts, central government departments, housing associations, and further education colleges among others. LPA's assessment process establishes eligibility. You do not need to work this out yourself.
