Late Payments - Your Legal Rights
One thing that really drives me loopy (besides my daughter leaving half worn socks scattered around the house ..!) is when businesses don’t pay others on time … big businesses are often in the press for this but small businesses do it too.
But did you know that if your customers do not pay to terms then you are allowed by law to charge them interest on late payments and an admin fee for doing so?
Late payment legislation specifies that if you haven't agreed terms, then a payment can be classed as late after 30 days. If a payment is late that you can charge statutory interest on the payment - 8% above base rate, so at the time of writing 8.25%.
So if you are owed £1,000 then for each day it is late you can charge an additional 22.6p in interest. After 50 days it would be £11.30 of interest. If you intend to charge interest then you need to issue an amended invoice.
On top of this you can charge for recovery costs which are set depending on the amount owed - in this example it would be £70, again, these are set by legislation: https://www.gov.uk/late-commercial-payments-interest-debt-recovery
If this doesn't work then you can then look at taking legal steps to recover what is owed to you: https://www.gov.uk/make-court-claim-for-money
NOTE: Since writing this post, interest rates have increased from the historic low of 0.25% to 0.5% .. this means that 50 days of interest would now be £11.64!