What are late payment charges on business energy bills?
There is no single charge. Your contract sets any late fee, and the Late Payment of Commercial Debts Act can allow fixed sums of £40, £70 or £100 depending on the debt size, plus interest. Check your terms, then ask for a payment plan before things escalate.
Paying late on a business account can cost more than the interest. It can lead to extra fees, a security deposit, and in the end disconnection. Here is how it works.
Where late-payment terms come from
Your charges are set by the supplier's terms and conditions, which are part of your contract. Look for sections called "payment", "late payment" or "debt recovery". We could not find a single industry-wide late fee, and suppliers differ, so read yours rather than assume.
Citizens Advice says you will usually have around 28 days to pay, but your contract defines when you count as in debt.
The Late Payment Act
Business-to-business debts can also fall under the Late Payment of Commercial Debts (Interest) Act 1998. Under section 5A it provides fixed compensation for each overdue debt:
| Size of debt | Fixed sum |
|---|---|
| Under £1,000 | £40 |
| £1,000 to under £10,000 | £70 |
| £10,000 or more | £100 |
Interest can be claimed on top. Under the Act, statutory interest is 8% a year above the Bank of England base rate, according to the Small Business Commissioner. If your contract sets its own late-payment interest or charges, that can affect whether the Act's interest applies, so check your contract and take advice if a large sum is at stake.
Example: a £4,200 quarterly bill paid late could attract a £70 fixed sum under the Act, before any interest or contract charge.
What happens if you keep not paying
- Reminders and possible late fees.
- A request for a security deposit or a change to how you pay. See security deposits.
- Debt collection and a possible warrant to enter and disconnect. Citizens Advice says a supplier must wait at least 28 days after the bill is sent before applying to court, and should give at least 21 days' warning.
- Disconnection and reconnection fees, which can be added to the debt. See disconnection and reconnection.
What to do if you are behind
- Contact the supplier before the due date and propose a repayment plan. See payment plans.
- Pay any undisputed part and dispute the rest in writing.
- Ask whether charges can be waived given your payment history.
- Get free help from Citizens Advice or your local business support if you are struggling. See what to do if you can't pay.
A disputed bill is not a licence to stop paying everything. Keep paying the undisputed amount to avoid arrears.
Worked example: what late payment can add
Illustrative only. Suppose a £4,200 bill is paid 60 days late and the base rate is 4%, making statutory interest 12% a year. Interest: £4,200 × 12% × 60 ÷ 365 = about £82.85. Add the £70 fixed sum and the total is about £152.85, before any separate contract charge. Check the actual base rate and your contract terms; your supplier may use its own rate instead.
Disputes and late payment
If you genuinely dispute part of a bill, tell the supplier in writing which part and why, and pay the rest on time. Ask them to confirm in writing that the disputed sum will not attract charges while the dispute is open. Not every supplier will agree, but the request puts your position on record, and it helps if the matter reaches the Energy Ombudsman.
Next steps
Set up a reminder five days before each due date, or use a direct debit; see paying by direct debit and our guide to paying business energy bills.
Sources
General information only. Energy prices, rules and supplier terms change; check the latest position with your supplier, Ofgem or the Energy Ombudsman before you act.