Can I charge interest or late payment costs without it mentioned in contract?

[mit74]

I have a customer who just will not pay their latest invoices even though they're using the services installed. I'm about to send 7 days before action request but can I add expenses to the invoice? It's been a nightmare chasing them up, going to their premises only to be given excuses and the endless emails and texts. There's nothing in our contract about expenses or interest on late payments but it's costing me money to chase them all the time.

 

[OldWelshGuy]

There are set guidelines on late payment interest, you can't unilaterally introduce something that is not in your T&C's other than the statutory law of the land..

 

[mit74]

so I can add expenses and interest if based on set guidelines?

 

[OldWelshGuy]

https://www.gov.uk/late-commercial-payments-interest-debt-recovery

 

[mit74]

ah thanks

 

[Charlie B ACS]

Its the Late Payment of Commercial Debts regulations 2013. A Credit controllers best friend, though I've found, it's a stick more often waved, rather than used

 

[Big G]

Yes you can add statutory late payment interest & compensation based on the Late Payment of Commercial Debts regulations 2013 as mentioned above.

You should not that you can calculate this on each individual invoice rather than the whole amount. The compensation is £40.00 per invoice at a minimum so this can add up along with the individual interest too.

You can use this online calculator to work it out on each invoice :

http://late-payment-law.co.uk/calculator.html

Alternatively, you can also use a third party debt recovery company to pursue it for you!?

 

[Sam White]

Yes your entitled to claim statutory late payment interest & compensation based on the Late Payment of Commercial Debts regulations 2013 as mentioned above.

Simple (not compound) interest is calculated at the rate of 8% above a reference rate based on the Bank of England base rate. The reference rate is set each six months for the following six months as the base rate on 31 December and 30 June. You choose your reference rate based on the six month period in which the invoice became due.

In addition to charging interest, a late payment fee was introduced towards the costs of recovery of the debt. The fee was fixed depending on the size of the outstanding debt to be collected.

However, it is worth noting that just because you have the right to apply compensation charges and interest doesn’t mean that you always should. Charging interest and compensation is optional, and may not always be the right choice - You may have a long-term trading relationship with your customer and decide it’s better to maintain good relations for the future.

Hope that helps.

 

[Bob]

Just to check that it is B2B and not B2C as this only applies to commercial debts

 

[Sam White]

It is B2B only

 

[Bob]

It is B2B only

That is what I was implying
By the way, welcome to UKBF