Past due means the same as overdue, while an outstanding invoice is any unpaid invoice, due or not. On net 30 terms, an invoice dated September 1 is due on October 1 and overdue from October 2.
When an invoice becomes overdue
With an agreed payment date, the invoice is overdue from the next day. Without one, the default depends on the law that governs the contract.
- UK. Payment is late 30 days after the customer gets the invoice or you deliver the goods or service, whichever is later, according to gov.uk guidance. Agreed terms between businesses should usually be 60 days or less, unless longer terms are fair to both sides.
- EU. Under the Late Payment Directive 2011/7/EU, the default is 30 calendar days after the customer receives the invoice. Agreed terms between businesses should not exceed 60 calendar days unless expressly agreed and not grossly unfair to the creditor.
- US. The due date comes from your contract and invoice terms, such as net 30, so state them on every invoice.
In the UK, a Commercial Payments Bill introduced in May 2026 would cap most payment terms between businesses at 60 days. Until its changes take effect, the rules on this page apply.
What you can charge on an overdue invoice
In the UK, the Late Payment of Commercial Debts (Interest) Act 1998 gives a business simple interest on an overdue payment from another business at 8% over the Bank of England base rate. The base rate used is the one in force on the last June 30 or December 31 before interest starts to run. Bank Rate was 3.75% on December 31, 2025 and June 30, 2026, so interest that starts to run in 2026 carries 11.75% a year. If your contract sets its own substantial remedy for late payment, that applies instead.
Section 5A of the Act also gives you a fixed sum for each overdue invoice, plus reasonable recovery costs above it. The sum depends on the invoice amount.
| Amount of the invoice | Fixed sum |
|---|---|
| Less than £1,000 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
Example. A £12,000 invoice was due on July 31, 2026, and the customer paid on September 29, 60 days late. Interest is £12,000 × 11.75% = £1,410 a year, so 60 days come to £1,410 × 60 ÷ 365 = £231.78. With the £100 fixed sum you can claim £331.78 on top of the invoice.
In the EU, the directive sets statutory interest at the European Central Bank's main refinancing rate, or the national central bank rate outside the euro area, plus at least 8 percentage points, and a fixed sum of at least €40, both due without a reminder. National laws apply it, and some set higher amounts. In the US, no federal law sets interest on late payments between businesses, so late fees depend on your contract and state law.
How to measure overdue balances
The simplest measure is the overdue share of receivables, the total of overdue invoices divided by all unpaid invoices. Track it monthly, because a rising share means collections are falling behind sales.
Example. You have $2,400,000 in receivables, of which $540,000 is overdue, so the overdue share is $540,000 ÷ $2,400,000 = 22.5%. A month earlier it was $450,000 of $2,250,000, or 20%. Receivables grew 6.7%, while overdue balances grew 20%.
The share does not show how late the money is. An accounts receivable aging report (aged debtors report in the UK) groups overdue invoices by how many days late they are, and days sales outstanding shows how long customers take to pay on average.
What to do about an overdue invoice, step by step
- Check that it is really unpaid. Look for unapplied payments, credit notes or a logged dispute.
- Send a reminder within a few days. Attach the invoice and payment details, using the sample wording in the dunning letter entry.
- Call the customer. Find out if the cause is a dispute, a missing purchase order, cash trouble or an oversight, and agree a payment date.
- Send a firmer letter. Add statutory interest and the fixed sum where the law allows, or late fees under your terms.
- Escalate after a final notice. Set a last deadline, then hold the account, use a collection agency or start a court claim.
Sunbay reads invoices from your ERP or accounting system and, once one is overdue, runs the sequence you set, with reminders by email and SMS, AI voice calls and interest notes. Replies and payment agreements stay next to the invoice, and when the payment is posted in your ERP, Sunbay matches it and stops the reminders. Sunbay analytics shows overdue balances, aging and DSO in one view.
Frequently asked questions
Is a past due invoice the same as an overdue invoice?
Yes. Both describe an invoice that is still unpaid after its due date. An outstanding invoice is broader and includes invoices that are not yet due.
How much can you charge on an overdue invoice in the UK?
You can charge statutory interest at 8% over the Bank of England base rate (11.75% a year for interest that starts to run in 2026), plus a fixed sum of £40, £70 or £100 per invoice and any reasonable recovery costs above it. This applies between businesses unless your contract sets its own substantial remedy.
What should a reminder for an overdue invoice say?
Give the invoice number, amount, due date and days overdue, with your payment details and a copy of the invoice. Ask for a payment date, and in later reminders state any interest you are adding and the deadline.
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