Late payment interest in Ireland: your rights on business invoices

The European Communities (Late Payment in Commercial Transactions) Regulations 2012 (S.I. No. 580 of 2012) implement the EU Late Payment Directive. They came into operation on 16 March 2013 and apply to commercial transactions between businesses and between businesses and public authorities. They do not apply to transactions with consumers.

Where a customer does not pay by the relevant payment date, it is an implied term of the contract that the supplier is entitled to late payment interestStatutory interest a business can claim on overdue invoices from other businesses or public bodies under the European Communities (Late Payment in Commercial Transactions) Regulations 2012 (S.I. No. 580 of 2012). on the amount outstanding. Interest runs from the day after the payment date until the debt is paid.

The statutory rate is the European Central Bank's main refinancing rate plus 8 percentage points. Our blog on the July 2026 rate change explains the latest reset. It is reset on 1 January and 1 July each year, based on the ECBThe key interest rates set by the ECB for the euro area, including the main refinancing rate and deposit facility rate. rate in force on those dates.

• From 1 July 2026: 10.40% (ECB rate 2.40% + 8%)
• From 1 January 2026: 10.15% (ECB rate 2.15% + 8%)
• From 1 July 2025: 10.15%
• From 1 January 2025: 11.15%

The daily rate is 10.4% divided by 365, or about 0.0285% a day. For example, an invoice of €20,000 paid 45 days late would attract interest of roughly €256 (€20,000 × 10.4% × 45 ÷ 365), plus fixed compensation of €100. Your contract can set a different rate, but a contract term that excludes late payment interest is presumed to be grossly unfair.

When late payment interest becomes payable, the supplier is also automatically entitled to a fixed sum of compensation for recovery costs, on top of the interest. The amount depends on the value of the late payment:

• Not more than €1,000: €40
• More than €1,000 but not more than €10,000: €70
• More than €10,000: €100

You can also claim reasonable compensation for recovery costs above the fixed sum, such as solicitor or debt collection agency fees, where you have incurred them.

When is a payment actually late? It depends on whether you have agreed terms.

• No agreed payment date: payment is due 30 days after the customer receives the invoice. If the receipt date is uncertain, or the invoice arrived before the goods or services, the 30 days run from delivery.
• Acceptance or verification: where there is an agreed acceptance or verification procedure and the invoice arrives on or before it, payment is due 30 days after that procedure takes place.
• Contracts between businesses: you can agree your own payment date. A term longer than 60 days from delivery must be expressly agreed in the contract and must not be grossly unfair to the supplier.
• Contracts with public authorities: the payment period should not exceed 30 days, with longer periods allowed only in limited cases where expressly agreed and justified.

A supplier can challenge a grossly unfair term or practice. The Regulations allow an application to the Circuit Court or to an arbitrator, and representative bodies can challenge grossly unfair standard terms.

Public bodies are covered by the Prompt Payment of Accounts Act 1997, as amended by the 2012 Regulations. They must generally pay within 30 days, and late payment interest and compensation are included in the amount payable without the supplier having to ask. The supplier cannot waive the interest.

Since June 2009, central government departments have also had a non-statutory commitment to pay suppliers within 15 days. A public body can return an incorrect invoice, and payment can be held where a requested tax clearance certificate has not been provided, so keep your tax affairs and invoices in order.

The right to statutory interest on invoices is automatic, but in practice you need to ask for the money. A simple process:

1. Set clear payment terms in writing before you start work, and show them on every invoice.
2. Record the date each invoice was sent and received.
3. When an invoice is overdue, calculate the interest from the day after the due date at the rate in force.
4. Send a statement or invoice for the interest and the fixed compensation, citing the 2012 Regulations.
5. If it is still unpaid, consider a final demand letter and take advice from a solicitor on recovery options.

Many businesses choose not to charge interest to protect a valued customer relationship. That is a commercial decision, but knowing your rights strengthens your position in any conversation about overdue invoices. For questions on the Regulations, the Department of Enterprise, Tourism and Employment recommends seeking legal advice.

Statutory interest is a useful backstop, but most businesses would rather be paid on time. Good credit control habits help:

• Check new customers before giving credit, for example by reviewing their filed accounts on the CRO register or asking for trade references.
• Agree payment terms in writing at the start and include them in your quotes, contracts and invoices.
• Invoice promptly and accurately, quoting purchase order numbers so invoices are not returned or held up.
• Find out who approves payments at your customer and when their payment runs take place.
• Send a friendly reminder shortly before the due date and follow up as soon as an invoice is overdue.
• Set credit limits and consider pausing supply to customers who repeatedly pay late.
• Mention your right to statutory interest and compensation in your terms of business.

If you agree a different interest rate in your own contract, that agreed rate applies instead of the statutory rate, so make sure any rate you write into your terms is one you are happy to rely on. If in doubt about the wording, ask a solicitor to review your terms of business.

Clear terms and consistent follow-up often fix late payment without the need for formal claims. Where they do not, the Regulations give you a clear legal basis to charge for the delay.

Charging interest compensates you for late payment, but it does not put cash in the bank when you need it. Invoice finance can. A finance provider advances a large part of the value of your unpaid invoices, usually within days, and you receive the balance, less fees, when the customer pays.

• Invoice discountingA confidential form of invoice finance where a company borrows against its unpaid invoices but keeps control of its own credit control and collections.: you keep control of your sales ledger and collections, and customers usually do not know a lender is involved.
• Invoice factoring: the provider manages collections for you.
• Selective invoice financeA form of invoice finance where a company chooses individual invoices or customers to fund, rather than its whole sales ledger.: you choose which invoices or customers to fund, which suits businesses with a few large, slow-paying accounts.
• Working capital loans: a short-term loan or revolving facility can smooth cash flow while you wait for payments. Our guide to overdraft alternatives for Irish companies compares these options.

Invoice finance is generally available to Irish limited companies that invoice other businesses or public bodies on credit terms, subject to each funder's criteria. All finance is subject to status and lender approval.

If slow payers leave your company short of cash, our panel of specialist non-bank lenders can consider working capitalThe money a business has available to fund day-to-day operations, calculated as current assets, such as cash, stock and debtors, minus current liabilities, such as suppliers and short-term debt. and short-term business loans, and our guide to small business loans in Ireland explains the wider choice. Tell us what your company needs and we'll tell you honestly whether our panel can help, or where to apply instead. We are paid commission by lenders. We do not charge your company a fee and never ask for payment upfront. Welcome Finance is a commercial finance broker, not a lender, is not regulated by the Central Bank of IrelandIreland's financial regulator and part of the Eurosystem., and arranges business-purpose finance only for companies registered in Ireland (LTD, DACA type of Irish private company under Part 16 of the Companies Act 2014 that keeps an objects clause in its constitution, limiting what it can do, and uses the suffix DAC., PLCA company type under Part 17 of the Companies Act 2014., ULCA company under Part 19 of the Companies Act 2014 whose members have unlimited liability for its debts.).