I dare say you’ve often thought of charging interest on late payments, but just as often thought better of it. And sometimes that’s right; it’s not guaranteed to make friends. You’d be well advised before you do it to reflect on your relationship with the client in question, to maybe discuss it with your staff most directly involved, and to check that your credit management system is properly set up for it.
But you can do it, of that there’s no doubt. There is a statutory right to charge interest that purchasers cannot override, and there’s a contractual right that arises if charges feature in your terms and conditions.
To summarise, however, you’re at liberty to set your own contractual rate, which may be higher or lower than the statutory rate. The latter, however, is defined. The Bank of England base rate at 31 December is the reference rate for the first half of the subsequent year, the rate at 30 June the reference for the second half. In either case you simply add 8% (and again see the online calculation tool referred to above).
If you don’t already have charging procedures in place, there are steps you need to take.
Your invoices should show the agreed payment date from which interest becomes chargeable and you should advise customers if interest starts to accumulate.
Your invoices should also state your right to claim statutory interest at base rate + 8% and to claim compensation for the cost of recovering debt.
You might, however, choose to issue a final written statement to the effect that payment is overdue and that interest charges will be imposed in so many days.
Finally, when all is settled, you should issue a detailed receipt showing the relevant figures in full.
And if that effort comes to naught, you just phone David Degiorgio on 07740 443083.
For information on any matter relating to the above, call David Degiorgio on 07740 443083 at any time. Other services include Debt Recovery, Information Gathering, Tracing, Fraud Investigation and Process Serving.
Member since: 29th March 2012
London House Services, in Ipswich, we are ethical debt recovery specialists. We do the job professionally and properly. For further information please call David Degiorgio Tel 01473 250066.