Late payments will create you cashflow problems and can increase the risk that you will not be paid at all. Using your legal right to claim interest on late payments from late-paying customers can encourage customers to pay on time.
The statutory right to interest and compensation applies to all contracts. You just need to decide whether to enforce your rights, and if so how. This is understandably tricky if you don’t have the power to ‘upset’ current clients without fear of repercussions.
You have the right to charge interest on late payments
Every business has a statutory right to charge interest on late payments
The right applies to sales to business and public sector customers. These also publish their arbitration policies which we include in our search engine.
The right does not apply to sales to consumers.
You can negotiate your own contractual agreement.
A contractual agreement must provide a ‘substantial remedy’ if the customer pays late.
The customer cannot impose unfair terms: for example, contractual payment periods are usually capped at 60 days.
Public sector customers must pay within 30 days and interest on late payments cannot be lower than the statutory amount.
In the absence of any specific payment terms, the statutory right will apply, normally a payment is late after 30 days.
Interest starts being chargeable from the end of the agreed credit period
What difference does it make?
Under the law, company finance directors who made a habit of taking extra credit from suppliers to improve cashflow have had to think again.
There will be less free credit to be had just by paying slowly
Attitudes towards late payment should change for the better.
Let’s find out how much you could be owed
Payment Check help you identify how much interest and fees you could be owed on outstanding invoices and importantly, any invoices that were paid late in the last 6 years.