Business owners - Taking back what you are due – the law
The Late Payment of Commercial Debts (Interest) Act 1998 and its subsequent regulations that are supplemental to the Act is there to help businesses tackle the expensive and time consuming problem of unpaid invoices. You should be compensated for this and the law can help you.
The Act only relates to the supply of goods and services between businesses (not consumers). You can claim under it provided you have not contained a provision for interest on overdue invoices in your payment terms (but you may be minded to change your existing payment terms if you are unaware of this Act). The provisions of Act become contractual terms of the contract between you and the late payer and can be pursued as a claim in the County Courts.
Interest – you can claim 8% over the Bank of England Base rate from the end of the credit period or from 30 days of issue of the invoice if no credit period was agreed. You can even claim interest on invoices going back over the last 6 years that have already been paid, as long as they were paid late.
Compensation – the Act allow you to claim for a fixed sum of compensation as well for each invoice at the following rates
Invoice up to £999.99 - £40 per invoice
£1,000 to £999.99 - £70 per invoice
Over £10,000 - £100 per invoice
Again, you can claim the compensation on any invoice paid late even if it was subsequently paid.
Reasonable costs – if you incur further costs over and above the amount provided for by the compensation amount, the Act will allow you to claim you reasonable costs of recovering the debt. These costs can be claimed if you have to pay to instruct solicitors or debt collection agencies. Also, the Act provides you with a contractual right to claim costs which can be claimed in any legal proceedings that are issued if payment is not forthcoming upon demand.
It is therefore possible to recover 100% of your invoice debt together with interest and all the associated costs in doing so, whatever the size of the debt. It is undoubtedly worth ensuring that your customers are aware that you reserve the right to claim these amounts to ensure timely payment and to be fully paid and compensated if payment is late and should you wish to rely on the law.
For more detailed information and should you require any assistance in recovering debts that are owed to you please contact: William Backhouse who is a Chartered Legal Executive at Mayo Wynne Baxter LLP on 01273 223 234 or firstname.lastname@example.org