Decide: Charge straight away or offer to waive
Most businesses never actually apply a late fee because they don’t need to. Telling a customer that statutory charges are about to start is often enough to get the invoice paid, or at least get a reply after weeks of silence.
A common, low-friction approach is to set out the fee and then offer to waive it if they pay the original amount by a short deadline. That gives the customer a reason to act now while keeping the relationship intact.
Tell the customer
Here’s an email you can adapt. It states the charges clearly, but makes the point that you’d rather resolve it without them.
Email template
Subject: Outstanding invoice INV-1234
Hi Mary,
I’m writing about invoice INV-1234 for £280, which was due on 1 January.
We’ve been in touch a few times (5 Jan, 12 Jan, 19 Jan and 26 Jan) but haven’t received payment or heard back about any issue with the invoice.
In line with our payment terms and UK late payment legislation, we’re now in a position to apply the following statutory charges:
- Late payment interest: £3.52
- Debt recovery compensation fee: £40.00
- Total late fees: £43.52
That would bring the outstanding balance to £323.52.
We’d much rather resolve this without the extra charges. If you settle the original £280 by 16 February, we’ll waive the late fees entirely.
Do let me know if there’s anything holding up payment.
Kind regards,
Anna
For a full set of reminder emails from a first gentle nudge through to formal escalation, see our late payment email templates.
Generate the late payment fee invoice
If you decide to charge it, raise the interest and compensation as a separate invoice in Xero with no VAT. The method is in how to add late payment fees to invoices in Xero, or you can have Trove raise and update it for you.
When to escalate
If the fee and a clear email still don’t work, escalate in steps: a final reminder, a statement of the full balance including accrued interest, then a letter before action setting out that you intend to recover the debt. Because statutory interest keeps accruing daily, time is on your side - the longer they leave it, the more they owe.
Automatic late fees - launching July 2026
Trove is launching a late payment fee plan, free for all Xero users. Join the waitlist to be notified when it goes live and get early access.
