Late payment compensation is your legal right under EU Directive 2011/7/EU to charge clients who pay after the due date. It's not a favor. It's not optional. It's the law, and it's designed to protect small businesses and freelancers from cash flow problems caused by late-paying clients.
What You're Entitled To
When a B2B invoice is paid late in the EU, you can claim:
- Fixed compensation fee - €40 (or currency equivalent) per late invoice
- Interest on the amount owed - Typically 8% + the European Central Bank rate
- Recovery costs - Reasonable expenses for pursuing payment
The €40 fee is automatic. You don't need to prove damages or send warnings. The invoice was due, it wasn't paid, you're owed €40.
How It Works
- Invoice becomes overdue (based on your payment terms)
- Legal interest starts accruing daily
- You're entitled to €40 compensation immediately
- You send a reminder with added compensation
- Client pays or you escalate
Most freelancers don't claim this. They're worried about damaging client relationships. But here's the reality: clients who consistently pay late don't value the relationship. You're subsidizing their cash flow with your money.
When to Claim
You can claim compensation:
- After the due date - No grace period required by law
- For any amount - Even small invoices qualify
- Repeatedly - Every late invoice is a separate claim
In practice, many freelancers send a friendly reminder first, then add compensation if payment doesn't arrive within a week.
How to Claim It
- Send a formal reminder stating the original amount, interest, and €40 compensation
- Reference EU Directive 2011/7/EU
- Provide updated payment instructions
- Set a new deadline (e.g., 7 days)
- If still unpaid, escalate or use debt collection
Most clients pay when they realize you know your rights.
Why Freelancers Should Use This
Late payments kill freelance businesses. You've done the work, you're owed the money, but you're stuck chasing it while bills pile up. Late payment compensation:
- Discourages late payment - Clients pay on time when there are consequences
- Recovers actual costs - Your time chasing payment has value
- Levels the playing field - Large clients can't bully freelancers with payment delays
- Is legally backed - You're not being difficult, you're enforcing the law
Chronobill tracks overdue invoices, auto-calculates late payment interest and compensation, and generates compliant reminder letters—so you can claim what you're owed without the manual work.