Commercial Debt management on late payment or non-payment of commercial debts can be managed by using the law effectively. The late payment of commercial debts (interest) act 1998 can be used to compensate creditors for late payment as well as deter debtors from late payment.
It is exclusively for the supply of goods and services where the creditor, in its T&C, has not made provision for interest. The act allows the creditor to claim for interest, compensation and reasonable costs.
As part of your commercial debt management process if your client hasn’t paid on time you can make a claim provided
|Up to £999.99||£40/invoice|
|£1,000 – £9,999.99||£70/invoice|
|£10,000 and above||£100/invoice|
The above compensation is intended to cover the costs of recovering the debt. If the costs are more, you can claim for what hasn’t been covered above. E.g costs of employing a commercial debt recovery agent.
When allowing credit to your clients it’s a good idea to credit check them and their companies. It’s also a good idea to let your creditors know that you know the regulations and how to use. This can be a powerful deterrent.
If you already have terms that include interest on late payment than these terms will prevail until you change your term of business. You should issue your clients with the updated terms. You should be able to prove when each client has been informed of the change in terms.
Finance Equation Ltd is a multi award winning chartered certified accountants. Call us on 020 3086 7472 to see how we can make a difference to your business.
The Finance Equation Ltd is a company registered in England & Wales. Company number 05116983.
Business address: Finance Equation Ltd, 334 Ley Street, Ilford, Essex, IG1 4AF.
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