This case study shows how by using the Claim the Unclaimed service provided by Lovetts, which uses the Late Payment of Commercial Debts (Interest) Act 1998 to recover historic interest and compensation, one client was able to recover over £41,000 in interest and compensation on past late paid invoices over the last six years.
Our client, a provider of physiotherapy services to a variety of medical and rehabilitation service providers faced a constant problem of their invoices repeatedly being paid late. This caused cash flow issues and meant staff had to spend a significant amount of time and effort chasing their customers for payment. Eventually in a number of cases our client had to cease working with their customer due to their persistent poor payment practices.
Many businesses are aware of the Late Payment Act, which allows creditors to claim interest and compensation on invoices which are not paid to terms. However few businesses are aware that the legislation applies retrospectively, allowing claims to be made for any invoice paid late in the past six years (five years in Scotland).
Our client simply had to send a spreadsheet with a list of invoices paid late and Lovetts calculated the compensation and interest due.
Lovetts then wrote to the client's past debtors to inform them of their ongoing requirement to pay statutory compensation for the past late paid invoices under the Late Payment legislation and request immediate payment.
Our client has now received payment of over £41,000 by claiming interest and compensation in number of cases. In 90% of cases this was achieved without the need to resort to legal action. Furthermore all new customers are now clearly warned on every invoice paid late will result in compensation and interest becoming due and that the only way to avoid this is to pay on time.
The client used the services of Lovetts UK prelegal team who operate on a no collection no fee basis meaning there was virtually no risk to the client. Payment was taken as a percentage of any interest or compensation successfully collected for the client.
Do you have past clients who were persistent late payers? If so then you could be entitled to significant sums under the Late Payment Act. Speak to us today and we can help you analyse your purchase ledger to see what you may be entitled to claim. And in most cases we will be able to do this on a no collection, no fee commission basis, meaning it won't cost you a penny win or lose!
Or, if you want to know more about how to claim compensation and interest from your historical debtors, read our Claim the Unclaimed product page for a more detailed overview on the service.
Beware! You can only claim interest and compensation if your Terms of Business allow for this. Don’t lose out – read our handy guide on the pitfalls of poorly drafted Terms of Business and make sure you aren’t making the same mistakes.