74% of freelancers experience late payments.
Most chase their invoices with polite follow-ups, hoping the client will pay. Eventually, they do—weeks or months late—and the freelancer moves on.
Here's what most freelancers don't know: You're legally owed compensation for every late payment.
Not just in a "fair is fair" way. In an actual "EU law says you get money for this" way.
If you're a freelancer doing business in the EU, you have rights under EU Directive 2011/7/EU—and most clients either don't know this or are betting you won't claim it.
This guide will show you exactly how the law works, how much you're owed, and how to claim it.
What is EU Directive 2011/7/EU?
The official name is "Directive 2011/7/EU on combating late payment in commercial transactions."
Translation: The EU got tired of big companies screwing over small businesses with slow payments, so they made it illegal.
When It Applies
The directive covers business-to-business (B2B) transactions in all 27 EU member states.
That means:
- You're a freelancer, consultant, contractor, or small business.
- Your client is a company, agency, or public authority.
- The work was done in or invoiced to an EU country.
If all three are true, the law is on your side.
Who's NOT Covered
The directive doesn't cover business-to-consumer (B2C) transactions. If you're selling to individuals (not companies), different rules apply.
Also: If you're invoicing a client outside the EU, this doesn't automatically apply. Check your contract and local laws.
Why It Was Created
Small businesses—especially freelancers—live and die by cash flow. When a big company pays 60 days late, it's an accounting hiccup for them. For you, it's missing rent.
The EU directive exists to level the playing field. It says: If you're late, you pay more.
EU Member States + UK
All 27 EU countries must implement this directive into their national law. The UK had similar rules pre-Brexit and still does (Late Payment of Commercial Debts Act).
Translation: Whether you're in Germany, France, Spain, or the UK, some version of this protection exists.
The Two Components of Compensation
When a client pays late, you're entitled to two separate forms of compensation:
- Fixed compensation (minimum €40)
- Interest on the outstanding amount
Both are automatic. You don't need to prove damages or negotiate. The law says you get them.
Component 1: Fixed Compensation (€40 Minimum)
The directive guarantees you at least €40 per late invoice as compensation for recovery costs.
This is meant to cover your time and effort chasing payment—emails, phone calls, admin overhead.
Key points:
- Automatic from day 1 after the due date. You don't need to send a demand letter first.
- €40 is the minimum. If your actual recovery costs are higher (e.g., you hired a lawyer or debt collector), you can claim more.
- Per invoice, not per payment. If you send three invoices and all three are paid late, that's €120 in fixed compensation.
- No VAT charged on this amount. Compensation is separate from your original invoice.
Real-world example: You invoice €1,000 with Net 14 terms. Client pays on day 30. You're owed €1,000 + €40 fixed compensation.
Component 2: Interest on Late Payment
On top of the €40, you're owed interest on the unpaid amount.
The formula is: European Central Bank (ECB) reference rate + 8 percentage points
The ECB rate changes every 6 months (January 1 and July 1). As of January 2026, the base rate is around 2.15%, which means the total interest rate is 10.15% annually.
Current Interest Rates by Country (January 2026)
| Country | ECB Rate + 8% | Effective Annual Rate | |---------------|---------------|-----------------------| | Germany | 2.15% + 8% | 10.15% | | France | 2.15% + 8% | 10.15% | | Netherlands | 2.15% + 8% | 10.15% | | Italy | 2.15% + 8% | 10.15% | | Spain | 2.15% + 8% | 10.15% | | Poland | 2.15% + 8% | 10.15% | | Belgium | 2.15% + 8% | 10.15% |
Note: These rates update every 6 months based on ECB policy. Check the latest ECB reference rate if you're reading this after June 2026.
How Interest is Calculated
Interest accrues daily from the day after the payment was due.
The formula: (Invoice Amount × Annual Interest Rate × Days Overdue) / 365
Example:
- Invoice: €5,000
- Due date: January 1, 2026
- Payment received: February 15, 2026 (45 days late)
- Interest rate: 10.15%
Interest owed: (€5,000 × 10.15% × 45) / 365 = €62.60
Total compensation: €40 (fixed) + €62.60 (interest) = €102.60
Important: Interest Applies to Gross Amount (Including VAT)
If your invoice is €5,000 + €1,000 VAT = €6,000 total, interest is calculated on the full €6,000.
However, you don't charge VAT on the interest or fixed compensation itself. Those are separate penalty payments, not part of your original service.
When Can You Claim?
Here's when the clock starts and what you need to have in place.
Default Payment Period: 30 Days
If you don't specify payment terms on your invoice, the default is 30 days from either:
- The date the client receives the invoice, or
- The date you delivered the service (whichever is later)
After 30 days, the invoice is legally overdue and compensation starts accruing.
Contractual Payment Terms
You can agree to different terms with your client—but there are limits:
- Between businesses (B2B): Up to 60 days is allowed. Anything longer is considered "grossly unfair" and may not be enforceable.
- Public authorities (government clients): Maximum 30 days. They're held to stricter standards.
If you set Net 14 terms and the client agrees, compensation starts on day 15.
What If No Payment Date Is Specified?
If your invoice doesn't have a due date and you didn't agree to terms in advance, the law defaults to:
- 30 days from invoice date, or
- 30 days from delivery of goods/services
Lesson: Always put a due date on your invoice. Makes enforcement cleaner.
Documentation You Need
To claim compensation, you need:
- A valid invoice with all required details (see next section)
- Proof of delivery (email confirmation, signed contract, project handoff)
- Proof the client received the invoice (email read receipt, client acknowledgment)
- Evidence of the due date (either stated on invoice or implied by contract)
If your invoice doesn't meet legal requirements (missing VAT number, unclear payment terms), the client can dispute the claim. Keep your invoices clean.
Step-by-Step: How to Claim Your Compensation
Here's the exact process to claim what you're owed.
Step 1: Verify Your Invoice Meets Requirements
Before you can claim, your invoice needs to be legally valid. That means it includes:
- Invoice number (unique identifier)
- Invoice date
- Due date (or reference to Net X terms)
- Your business details: Name, address, VAT number (if applicable)
- Client details: Name, address, VAT number (if applicable)
- Description of work: Clear, specific (not just "consulting services")
- Amount due: Line items, subtotal, VAT breakdown, total
- Payment terms: "Payment due within 14 days" or "Net 14"
If something's missing, fix it before claiming. Clients will use any excuse to delay.
Step 2: Calculate Days Overdue
Count from the day after the due date.
Example:
- Due date: January 10
- Payment received: January 25
- Days overdue: 15 days
If you haven't been paid yet, calculate from the due date to today.
Step 3: Calculate Total Compensation
Use the formula from earlier:
Fixed compensation: €40
Interest: (Invoice Amount × Interest Rate × Days Overdue) / 365
Example calculation (Germany, 15 days overdue):
- Invoice: €2,500
- Interest rate: 10.15%
- Days overdue: 15
Interest: (€2,500 × 10.15% × 15) / 365 = €10.43
Total compensation: €40 + €10.43 = €50.43
Round to two decimal places.
Step 4: Send a Formal Demand Letter
Once you've calculated what you're owed, send a professional demand.
Template:
Subject: Overdue Invoice #[Number] + Late Payment Compensation
Hi [Client Name],
Invoice #[Number] dated [Invoice Date] was due on [Due Date].
As of today, payment is [X] days overdue.
Under EU Directive 2011/7/EU, late B2B payments are subject to:
- Fixed compensation: €40
- Interest: €[Amount] ([X] days at [Y]% annual rate)
Total outstanding: €[Original Invoice] + €[Compensation] = €[Total]
I'd prefer to resolve this without escalation. Please confirm payment
of the full amount by [Date – give 7-14 days].
If you've already sent payment, please disregard this email and let me
know the payment reference so I can confirm receipt.
Thanks,
[Your Name]
Send via:
- Email with read receipt, or
- Registered post (if you need proof of delivery)
Keep a copy. You'll need it if this goes to court or a debt collector.
Step 5: Follow Up or Escalate
If the client doesn't respond within 14 days, you have options:
Option 1: Negotiate
Some clients will pay the original invoice immediately but push back on the compensation. You can:
- Accept partial compensation (better than nothing), or
- Stand firm and escalate to mediation/court.
Pick your battles. If it's a long-term client and €50, you might let it slide. If it's €500 and a repeat offender, fight for it.
Option 2: Mediation
Many EU countries have free or low-cost mediation services for commercial disputes. They act as a neutral third party to resolve the issue without going to court.
Option 3: Small Claims Court
If the amount is under a certain threshold (usually €5,000-€10,000 depending on country), you can file in small claims court. You usually don't need a lawyer.
Process:
- File a claim with your local court (small fee, typically €50-€150)
- Submit your invoice, demand letter, and proof of delivery
- Court summons the client
- They either pay or show up to dispute
- Judge rules in your favor (if your documentation is solid)
Timeline: 2-6 months depending on court backlog.
Option 4: Debt Collection Agency
Hire a debt collector (they usually take 10-30% of what they recover). Only worth it for larger amounts or if you don't have time to chase.
Country-Specific Resources
Here are a few starting points for enforcing payment in major EU countries:
- Germany: Bundesministerium der Justiz – Small Claims
- France: Service Public – Impayés
- Netherlands: Rechtspraak – Small Claims
- UK: Money Claim Online
Check your country's Ministry of Justice or Chamber of Commerce website for local procedures.
How Chronobill Automates This
Manually tracking overdue invoices, calculating interest rates by country, and drafting demand letters is a pain.
Chronobill automates the entire process:
1. Automatic Overdue Detection
The Action Inbox surfaces overdue invoices the day they're late. No manual tracking. No spreadsheets.
2. One-Click Compensation Calculation
Click "Calculate compensation" and Chronobill does the math:
- Pulls the current ECB rate for your country
- Calculates days overdue
- Computes €40 fixed + interest
- Shows you the total you're owed
3. Built-in Demand Letter Generator
Chronobill generates a professional demand letter with:
- Invoice details
- Days overdue
- Compensation breakdown
- Legal references to EU Directive 2011/7/EU
You review, send, and track all in one place.
4. Payment Matching
When the client finally pays, Chronobill automatically matches the payment to the invoice and flags if they paid the compensation or not.
No guessing. No manual reconciliation.
Real Example: €5,000 Invoice, 45 Days Late
Let's walk through a real scenario.
The Setup:
- You're a freelance designer in Berlin
- You completed a website redesign for a Dutch agency
- Invoice: €5,000 (excluding VAT, but let's keep it simple)
- Payment terms: Net 30
- Invoice date: January 1, 2026
- Due date: January 31, 2026
- Payment received: March 15, 2026 (45 days late)
The Calculation:
Fixed compensation: €40
Interest:
- Amount: €5,000
- Rate: 10.15% (Germany/Netherlands, January 2026)
- Days overdue: 45
Interest: (€5,000 × 10.15% × 45) / 365 = €62.60
Total compensation: €40 + €62.60 = €102.60
What You Do:
- Send a demand letter on March 16: "Invoice #2024-001 was paid 45 days late. Per EU Directive 2011/7/EU, you owe €102.60 in compensation."
- Client responds: "We didn't know about this law. Can we settle for €50?"
- You decide: Take the €50 now or push for the full €102.60.
If you're maintaining the relationship, you might take €50 and document it as "partial compensation accepted." If it's a repeat offender or you don't care about future work, push for the full amount.
The Outcome:
You get paid. The client learns that paying late has consequences. Next time, they'll prioritize your invoice.
Common Questions
Will This Damage My Client Relationship?
Depends on the client.
If they're reasonable and made an honest mistake (invoice got lost, accounting was on vacation), a polite demand usually gets resolved quickly.
If they're chronically slow payers who don't respect your time, enforcing compensation sets boundaries. You're a business, not a free bank.
Good clients will understand. Bad clients will push back—and that tells you everything you need to know about whether to keep working with them.
Can Clients Refuse to Pay Compensation?
They can refuse. But they can't legally avoid it.
If they don't pay voluntarily, you can escalate to mediation or court. The law is clear, and courts consistently rule in favor of freelancers when the documentation is solid.
Most clients pay once they realize you're serious.
What If My Client Is Outside the EU?
EU Directive 2011/7/EU only applies to EU-based transactions.
If your client is in the US, UK (post-Brexit), or elsewhere, you'll need to rely on:
- Your contract's late payment clause (if you included one)
- Local laws in the client's jurisdiction
- International arbitration (if specified in your contract)
Lesson: Always include late payment terms in your contracts, regardless of where the client is.
Do I Need a Lawyer?
For small claims (under €5,000), usually not. Small claims courts are designed for self-representation.
For larger amounts or complex disputes, a lawyer can help—but their fee will eat into your compensation. Weigh the cost.
Many freelancers use the threat of legal action to get paid without actually filing. A formal demand letter citing the EU directive often does the trick.
What If I Have Multiple Overdue Invoices from the Same Client?
You're owed compensation per invoice.
Three invoices = three separate €40 fixed fees + interest on each.
Total it up and include the breakdown in your demand letter.
Conclusion: Stop Leaving Money on the Table
If you're a freelancer in the EU and a client pays late, you're legally owed compensation.
Not "maybe if you ask nicely." Not "only if you have a lawyer." Automatically, by law.
The €40 fixed fee + interest might not sound like much for one invoice. But if you're dealing with 5-10 late payments a year, that's €200-€500+ you're leaving on the table.
And more importantly, enforcing your rights sends a signal: Your time has value. Your payment terms have consequences.
Clients who know you'll enforce late fees are clients who pay on time.
Start Tracking Your Invoices with Chronobill
Chronobill was built to solve this exact problem. Track time, send invoices, and get automatic alerts when payments are overdue—including one-click compensation calculations based on EU Directive 2011/7/EU.
No spreadsheets. No manual calculations. No missed opportunities to claim what you're owed.
Try Chronobill free for 30 days. No credit card required.
Built by freelancers who were tired of chasing money. Now we help others get paid faster.