Every figure Clearline puts in front of you comes from a rule, not a judgement, and this page is those rules. If you want to check our arithmetic against your own, everything you need is here. Where the model is an estimate rather than a calculation, it says so.
Under the Late Payment of Commercial Debts (Interest) Act 1998, a late business-to-business invoice carries two things on top of the debt, and neither needs a clause in your contract because the Act implies the right into the contract itself.
Interest runs at the Bank of England base rate plus eight percentage points, on the gross sum including VAT, from the day after payment fell due until the debt is paid. Clearline computes it to the day on a 365-day year: gross × rate × days ÷ 365.
Fixed compensation is added once per invoice under section 5A, by the size of the debt: £40 below £1,000, £70 from £1,000 to £9,999.99, and £100 at £10,000 and above. It is not pro-rated and it does not scale with how late the invoice is. A hundred late invoices therefore carry between £4,000 and £10,000 of compensation before a penny of interest.
The rate is not today's base rate. The Act fixes it by reference to the rate in force on the reference date for the six-month period in which the debt became late: 31 December for debts becoming late between January and June, and 30 June for debts becoming late between July and December. That rate then applies for the whole life of that debt, however long it runs and however many times the Bank moves afterwards.
This is the table Clearline uses. Every figure on the site and in every letter is computed from it, and nothing anywhere uses a different one.
| Debt became late | Reference date | Base rate | Statutory rate |
|---|
Verify any figure you intend to rely on against the Bank of England's published series. Where a debt became late before the earliest row, we do not guess: the calculation returns nothing and a person looks at it.
Where your contract sets a payment period, that governs, subject to the limits in the Act. Where it is silent, the statutory default applies: 30 days from the later of delivery of the goods or service and the notice of the amount owed.
Where the customer is a public authority, section 4(2A) fixes the period at 30 days from the invoice regardless of what was agreed, so interest runs from day 30 even where the contract said 60. Clearline applies that rule automatically when a debtor is identified as a public authority, and the report says on its face how many invoices it applied to.
Six years in England, Wales and Northern Ireland; five in Scotland. The clock runs from the date the debt fell due, and the scan flags any invoice inside six months of that boundary so it can be dealt with before it becomes unenforceable.
The entitlement to interest and compensation survives payment of the invoice itself. An invoice your customer eventually paid, late, still carries a claim for the statutory sums nobody ever charged, for the same six years. That is the whole basis of the Late Payment Audit, and the reason it carries no relationship risk: the principal is already settled.
This is a model, not a calculation, and it is the only part of a Clearline report that is. Recovery likelihood is banded by how late an invoice is, because age is the single strongest predictor of whether a commercial debt is recoverable, and each band carries a range rather than a point estimate.
| How late | Expected | Low | High |
|---|
Expected recovery on a ledger is the sum of each invoice's gross multiplied by its band rate, and the low and high figures are the same sum at the ends of each range. An invoice that was paid late, where only the statutory sums are being claimed, is modelled separately and lower, because a customer who has already paid has less reason to engage.
These bands are our own, derived from how commercial debt of each age behaves rather than from a published dataset, and they are deliberately conservative. They are not a forecast of your ledger and they are not a promise. Where a debt is uneconomic to pursue we say so in the report rather than quietly pricing it in.
One number out of a hundred, made of four things that decide whether a ledger recovers. It exists so there is a single figure a finance director can repeat in a meeting, and it is published here so nobody has to take it on trust.
| Component | Weight | What it measures |
|---|---|---|
| Ageing | 40 | The share of overdue value that is under 90 days. Fresh debt recovers; the score is proportional to that share. |
| Spread | 20 | How concentrated exposure is in your largest three customers. Full marks up to 40% of the book; the score falls from there to zero at 100%. |
| Discipline | 20 | Average days overdue across the book. Full marks at 30 days or under, falling to zero at 180. |
| Statutory claimed | 20 | Whether the statutory interest and compensation are being claimed at all. A ledger arriving for its first scan scores nothing here, because nobody has claimed them yet. Instructing is what moves it. |
The bands are strong at 75 and above, fair from 55, weak from 35, and critical below that. The fourth component is why a first scan rarely scores well, and that is deliberate: it is the part you can change immediately.
Your score is tracked in the portal against your own first scan, and nothing else. We do not compare you to an industry average, because we do not have one worth publishing, and an invented benchmark would be worse than no benchmark.
Two rates, applied to two different things, and one function computes both wherever a fee is quoted or billed.
On the principal, the rate is set by the age of the debt when you instructed it: 10% under 90 days, 15% from 90 days to a year, 25% beyond a year. On the statutory interest and compensation, the rate is 18% whatever the age, because that money is not on your ledger at all until Clearline claims it.
Credit control subscribers pay 8%, 12% and 20% on principal and 15% on statutory sums, because the early chasing has already been done and paid for. The Late Payment Audit is 18% standard and 15% for subscribers. Nothing is payable unless we recover, and court fees are the one cost outside this, never incurred without your written approval.
Every debtor in a scan is looked up at Companies House, and what comes back changes what we recommend rather than sitting in a footnote. An active company with clean filings is worked normally. A company in liquidation or administration is not pursued through us at all: unsecured creditors lodge a claim with the appointed practitioner, and we tell you that instead of taking the instruction. A strike-off notice, an overdue filing or a winding-up petition moves a debt up the order and shortens the sequence, because time matters more than tone at that point.
Debtors who are not companies, sole traders and partnerships, are identified as such, because the pre-action steps and the protections that apply to an individual are different. The scan tells you which of your customers are which.
It does not predict whether a particular debtor will pay. It gives a banded likelihood by age and a range around it, and the range is honest about the uncertainty.
It is arithmetic and law, not legal advice. Clearline is not a firm of solicitors. Where a matter needs a solicitor's opinion, it goes to one.
It assumes the ledger you give us is accurate. Credit notes, part payments and disputed amounts change the answer, and the report lists every row it could not read rather than dropping it.
It publishes no benchmark against other businesses. When Clearline has enough of its own data for a figure of that kind to mean something, it will be published here with the method that produced it, and not before.
Whenever the rules do. The base rate table gains a row at each half-year boundary, and the statutory bands change only if Parliament changes them. The Commercial Payments Bill before Parliament would void terms that exclude or water down the statutory entitlement, and if it passes this page will say what changed and from when.
Found something wrong with the arithmetic? Tell us and we will either fix it or show you why it is right. Both outcomes are useful.
The free scan runs every rule on this page across your aged debtor report and shows the working invoice by invoice, in about a minute.