Published 2026-07-05 · 5 min
Late payment interest in the EU: what you can charge and how
Under EU Directive 2011/7/EU, businesses can charge statutory late payment interest on unpaid B2B invoices equal to the ECB reference rate plus 8 percentage points, alongside a fixed EUR 40 minimum compensation for recovery costs. Charging it is straightforward on paper, but collecting it in practice depends on clear invoicing, timely notice, and consistent follow-up — an unpaid invoice costs you far more than the interest alone once financing costs, staff time and write-off risk are added up.
What the law actually gives you
Directive 2011/7/EU sets an EU-wide minimum: once a B2B invoice is overdue, the creditor is entitled to statutory interest at the ECB reference rate plus 8 percentage points, without needing a reminder first. On top of that, you can claim a fixed EUR 40 as compensation for recovery costs, and — if your actual costs were higher — the difference as well. Member states can set stricter rules, so always check local implementation for cross-border invoices.
The real cost of an unpaid invoice
Interest is only part of the picture. On average, an overdue invoice costs one to four percent of its value per month once you add up:
- Financing costs: you're effectively funding your customer's working capital.
- Internal time: chasing, chasing again and reconciling can easily take twenty to forty minutes per case.
- Write-off risk: this rises sharply the longer an invoice stays open.
- Opportunity cost: cash tied up in receivables can't be used for stock, staff or growth.
Recoverability drops fast with age
The longer you wait, the less likely you are to see the money at all.
| Age | Indicative recoverability | Recommended action |
|---|---|---|
| 0–30 days | Very high | Friendly reminder |
| 30–60 days | High | Formal final notice |
| 60–90 days | Moderate | Recover track or payment plan |
| 90+ days | Low | Escalation or settlement |
How to charge it without souring the relationship
State the statutory interest rate and the EUR 40 fee clearly in your terms and on your final notice, rather than springing it on the customer later. Most businesses use it as leverage to get paid rather than to actually collect the interest — and that's a perfectly reasonable strategy, as long as the invoice legally entitles you to charge it if needed.
Frequently asked questions
Do I need to send a reminder before interest starts running?
No — under the Directive, statutory interest starts accruing automatically from the day after the due date, without any need for a formal notice.
Does the EUR 40 fee apply per invoice?
Yes, it applies per overdue invoice, as a minimum flat fee for recovery costs, regardless of the amount owed.
When should I stop chasing and escalate?
In practice around sixty days past due, or sooner if the debtor stops responding altogether.
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