Commercial debt recovery can be daunting at times. Having a customer who fails to pay on time can have a huge impact on the cash flow of your business.
There are a number of options open to you when considering how to pursue recovery of unpaid invoices and if you require further advice concerning these options then please get in touch.
One tactic open to a business is to ensure that you charge your customers late payment fees and interest which you are entitled to do in accordance with the Late Payment of Commercial Debts (Interest) Act 1998. This legislation only applies to the supply of commercial goods and services where you dont have a provision for payment of interest in your terms and conditions of business.
You can claim late payment interest and compensation if:-
- You have supplied goods and services
- The buyer bought for business purposes
- The contract is not a consumer credit agreement
- The contact does not contain terms for payment of interest for late payment
You can claim interest at 8% per annum above the Bank of England base rate. If no credit period was agreed the period when you can charge interest begins 30 days after you supply the goods or when the invoice is due to be paid.
You can also claim late payment compensation of £40 per invoice on monies due up to £999.99 From £1000 to £9,999.99 you can claim £70 per invoice and over £10,000 you can claim £100 per invoice.
You don’t have to tell your customers you will claim interest and late payment compensation, but it would make good common sense to tell them of your intentions.
You can not claim late payment interest or compensation under the legislation if your terms and conditions of business provide for interest or compensation. Consider updating your terms of business and ensure you tell your existing customers about the changes you have made.
If you require further assistance or advice, please get in touch on 01924 291122.