In the UK, QuickBooks can't add a late payment fee for you. You're entitled to charge statutory interest (currently 11.75% a year) plus £40 to £100 of fixed compensation on every late business invoice, but in QuickBooks you have to work it out and invoice it yourself. Plenty of firms that threaten late fees never charge them for exactly that reason, so the practical fix is taking the admin out.
In this article
The short version
- The automatic late fee setting in QuickBooks guides is a US feature that adds a flat fee or percentage, and it doesn't calculate UK statutory interest.
- Business customers who pay late owe interest at 8% above base rate, currently 11.75% a year, plus £40, £70 or £100 of fixed compensation per invoice.
- On small invoices the compensation outweighs the interest: a £480 call-out paid 30 days late carries £4.64 of interest and £40 of compensation.
- By hand, set up two products, check aged receivables weekly and raise a separate invoice quoting the original number, which keeps the original invoice clean.
- Adfin's AI credit control can apply statutory interest and fixed compensation from the due date, with grace periods and waivers, and reconcile back into QuickBooks.
Why late fees get threatened but never charged
Plenty of contractors put "we charge interest on late payments" on their invoices and then never do. It's rarely nerve: charging properly means checking the aged debtors list, working out days late, calculating interest, raising a second invoice and chasing that too, for a sum that might be £45. With engineers waiting on parts and the phones going, it loses every time.
Customers notice, though. If a late fee is threatened and never applied, it stops meaning anything, and the slow payers learn they can pay you last.
What you can charge
Any business customer that pays late owes you two things by law, whether or not your contract mentions them:
- Interest at 8% above the Bank of England base rate. With the base rate at 3.75%, that's 11.75% a year, charged daily.
- Fixed compensation of £40 on invoices under £1,000, £70 up to £9,999.99, and £100 on £10,000 or more.
On small invoices the compensation is worth far more than the interest. A £480 call-out paid 30 days late earns £4.64 in interest but carries £40 in compensation, so the claim is £44.64. On a £12,000 panel replacement 20 days late, it's £77.26 of interest plus £100.
If you never agreed payment terms, an invoice is late 30 days after the customer receives it. Putting your terms and a line about statutory interest on every invoice won't change what you're owed, but it makes the charge much harder to argue with.
How to do it by hand in QuickBooks
The automatic late fee setting you may have seen in QuickBooks guides is a US feature, and even there it adds a flat fee or percentage rather than UK statutory interest. In the UK, the cleanest manual routine is:
- Set up two products: "Statutory interest" and "Late payment compensation".
- Once a week, run the aged receivables report and pick out anything overdue.
- Work out the claim: invoice amount × 11.75% ÷ 365 × days late, plus the compensation band. A three-column spreadsheet does it.
- Raise a separate invoice with the two items, quoting the original invoice number, and send it with a short note showing the working.
Raising it separately keeps the original invoice clean, so the customer's accounts team can still match their payment to it.
The routine works as long as someone does step 2 every week, and that's the step that slips.
How to take the admin out of it
Late fees work for the firms that apply them every time, automatically, so nobody has to decide to be the bad guy. That consistency is easy to hand to software. Adfin's AI credit control applies statutory interest and fixed compensation to overdue invoices from the due date, and the payment link your customer already has updates as the interest builds, so there's no second invoice to raise or chase. You can set a grace period and waive the charge for customers you'd rather keep sweet, and everything reconciles back into QuickBooks.
Customers who know the fee will actually arrive have a good reason to pay before it does. And because the same agents chase overdue invoices on the schedule you set, over email, SMS or WhatsApp, the late fee stops being a separate job at all.
Common questions
Can QuickBooks add UK late payment interest automatically? No. The automatic late fee setting is a US QuickBooks Online feature and applies a flat amount or percentage, not UK statutory interest.
How much interest can I charge on a late invoice? 8% above the Bank of England base rate, which is 11.75% a year at the current 3.75% base rate, calculated daily on the invoice amount.
How much fixed compensation can I add? £40 on invoices under £1,000, £70 from £1,000 to £9,999.99, and £100 on £10,000 or more, once per invoice.
Do I need late payment terms in my contract to charge interest? No, the right comes from the Late Payment of Commercial Debts (Interest) Act 1998. Stating it on your invoices and in your terms makes the charge less likely to be disputed.
Can I charge late fees to consumers? The statutory scheme covers business-to-business invoices only. For consumers you'd need a fair, clearly agreed term in your contract.
Is it worth charging late fees to good customers? That's your call. Many firms waive the first late payment for a long-standing customer and apply it to repeat offenders, which is easy to do if your system lets you waive per account.
Sources
- GOV.UK - Late commercial payments: charging interest on commercial debt (accurate as of September 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt
- Bank of England - The interest rate (Bank Rate) (accurate as of September 2026) https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
- Intuit QuickBooks - Understand automatic late fees in QuickBooks Online (US) (accurate as of September 2026) https://quickbooks.intuit.com/learn-support/en-us/help-article/invoicing/understand-automatic-late-fees-quickbooks-online/L0gewLCxt_US_en_US
- Adfin - Credit control (accurate as of September 2026) https://www.adfin.com/credit-control
