News : Valerie Moore
Using the Late Payment Act
04 November 2007
You have done the job for the customer; sent in your invoice and await payment. Many firms will pay on time but others delay – and occasionally do not pay at all.
Being paid by the due date is necessary for most small business to maintain their cash flow and pay their own bills. A delay of paying you by 7 days means that you may well have to delay paying your supplier 14 days and so it goes on down the line.
The Late Payment Act – or to give it its full title Late Payment of Commercial Debts (Interest) Act 1998 and Supplemented by the Late Payment of Commercial Debts Regulations 2002 – allows for interest to be charged on outstanding debts at 8% over the current bank base rate; plus an administration charge.
I would suggest that in your terms and conditions and on all invoices and statements is incorporated the phrase “All outstanding monies may incur interest in line with the Late Payment of Commercial Debts (Interest) Act 1998 and Supplemented by the Late Payment of Commercial Debts Regulations 2002”.
Note the use of the word “may”; it is then a business decision whether you pursue the interest payment dependent upon your relationship with each individual customer.
I have found that just incorporating these words into the terms and conditions means that more people will pay on time or pay after a phone call to remind them the debt is outstanding and that the Late Payment Act could be invoked.
Although this legislation was implemented for business to business situations; providing it is in your terms and conditions the principals can be used for individuals.
For more information on the Late Payment Act and how to work out the interest payments and what additional charges can be made go to www.payontime.co.uk or call for a booklet to 0870 150 2500
Being paid by the due date is necessary for most small business to maintain their cash flow and pay their own bills. A delay of paying you by 7 days means that you may well have to delay paying your supplier 14 days and so it goes on down the line.
The Late Payment Act – or to give it its full title Late Payment of Commercial Debts (Interest) Act 1998 and Supplemented by the Late Payment of Commercial Debts Regulations 2002 – allows for interest to be charged on outstanding debts at 8% over the current bank base rate; plus an administration charge.
I would suggest that in your terms and conditions and on all invoices and statements is incorporated the phrase “All outstanding monies may incur interest in line with the Late Payment of Commercial Debts (Interest) Act 1998 and Supplemented by the Late Payment of Commercial Debts Regulations 2002”.
Note the use of the word “may”; it is then a business decision whether you pursue the interest payment dependent upon your relationship with each individual customer.
I have found that just incorporating these words into the terms and conditions means that more people will pay on time or pay after a phone call to remind them the debt is outstanding and that the Late Payment Act could be invoked.
Although this legislation was implemented for business to business situations; providing it is in your terms and conditions the principals can be used for individuals.
For more information on the Late Payment Act and how to work out the interest payments and what additional charges can be made go to www.payontime.co.uk or call for a booklet to 0870 150 2500