The Government has introduced the Late Payment of Commercial Debts (Interest) Act 1998, which gives small firms with 50 or less employees a statutory right to interest for the late payment of commercial debts. This statutory right to interest and other new entitlements are available to all businesses and public sector bodies from 7 August 2002.
A guidance booklet is available from the DTI and will be sent to you free of charge or you can download
URN 04/606 Better payment practice: your guide to paying and being paid on time. It can be found here:
The late payment legislation does not prevent businesses from setting, and agreeing with customers, their own terms of business including the level of interest to be charged on late payment.
Where payment is proving difficult or the other party disputes the amount due, businesses should obtain legal advice or seek help from a professional debt recovery service. This does not necessarily mean going to court.
The Lord Chancellors Department publication Resolving Disputes Without Going to Court sets out the options available. This can be obtained from county courts, public libraries or your local Business Link.
Leaflets providing guidance on all aspects of recovering debts through the courts are available from the Court Service or from county courts.
The Law Society operates the “Lawyers For Your Business” scheme, offering a free consultation with a solicitor. Details of the scheme and the 1,700 legal practices involved in this scheme nation wide area available from the Law Society web site.
Landlords with commercial leases (the act does not apply to residential agreements (consumer) contracts) should consider changing the interest on late payments clause to incorporate the provisions of this legislation. This simplifies matters considerably when calculating and claiming interest in court.
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