Late Payment Interest

Late Payment Interest is the interest that automatically accrues on every invoice paid after the contractual due date. Under Italian Legislative Decree 231/2002 (implementing EU Directive 2011/7/EU), the rate equals the ECB rate plus 8 percentage points, without the need for formal notice.

How it works #

From the day after the invoice due date, interest accrues automatically. The creditor is also entitled to a flat compensation of €40 per late-paid invoice for recovery costs. No formal demand letter is required — the right arises from the law itself.

What it’s for #

It is the primary legal tool for discouraging late payments. In theory, it should make delaying economically disadvantageous for the debtor. In Italian practice, almost no consultant claims it for fear of losing the client — which renders the tool ineffective.

What can go wrong #

The reputational cost of claiming late payment interest is perceived as higher than the financial benefit. A consultant who sends a formal claim is a consultant who “won’t be called again.” The system relies on the supplier’s structural docility — and it works, until it doesn’t.