Let's start with some facts:
More than half (54%) of the UK’s small and medium sized businesses are suffering as a result of late payments. According to research from Pay UK, an estimated £23.4 billion of late invoices are owed to these firms.
We've done some research and summarise here what to us at Contracts-Direct look like sound ideas and strategies for reducing the risk of being paid late.
But before seeing what others are suggesting, our own recommendations are:
The British Business Bank has some useful tips, including:
BACS' 10 late payment tips include:
When does a payment become late?
If you do not agree a payment date, the law says the payment is late 30 days after either:
Can you charge interest if payment is late?
The interest you can charge if another business is late paying for goods or a service is ‘statutory interest’ - this is 8% plus the Bank of England base rate for business to business transactions. You cannot claim statutory interest if there’s a different rate of interest in a contract.
Interest is normally payable from the end of the agreed credit period. If no credit period was agreed, interest is payable 30 days from the later of:
If you supply a public authority, interest will be payable after 30 days, even if a longer payment date was agreed. You cannot agree to extend the 30 day period.If you supply another business, interest will normally be payable after 60 days even if a longer payment date was agreed. However, a credit period of more than 60 days can be agreed if it is not grossly unfair to the supplier.
Can you claim a debt recovery charges?
You can also charge a business a fixed sum for the cost of recovering a late commercial payment on top of claiming interest from it.The amount you’re allowed to charge depends on the amount of debt. You can only charge the business once for each payment.
|Amount of debt||What you can charge|
|Up to £999.99||£40|
|£1,000 to £9,999.99||£70|
|£10,000 or more||£100|
Other actions you can take:
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