Who Pays For The Legal Costs?
It’s not fair that your business ends up having to pay to chase a customer that is holding on to money that is rightfully yours. If your company has a clause in its terms and conditions that specifies the rate of interest that will be applied if a customer pays late, and makes no reference to the fact you will claim your costs of chasing late payment, it is likely you will be footing the bill for legal and in-house debt recovery costs.
How Will This Support Your Business?
The Late Payment Act allows you to claim compensation of between £40 - £100 on each invoice that is paid late. In addition, you can claim interest 8% above the Bank of England base rate.
All companies should apply a costs recovery clause in their terms and conditions. Don't forget that your costs are not limited to the legal fees but also include the in-house expenses and time spent chasing debts prior to instructing a solicitor. Including a provision for reasonable costs will protect your business from losing money when customers don't pay on time.
Can Companies Really Achieve A Cost Free Debt Collection Service?
Absolutely. Look at the example below and check how applying the late payment law makes a big difference when recovering debts.
Example A illistrates a debt where the client is unable to utilise the Late Payment Law. However, Example B shows the compensation and recoverable costs that could have been recovered if the client were able to utilise the Late Payment Law.
In the example above, the Late Payment Act enabled the company to recover £330 in excess of what they would have recovered if they weren't using the Act. This not only enabled them to cover the £150 costs that fell outside the fixed costs recoverable under the Civil Procedure Rules but it also resulted in an additional £180 in Late Payment Compensation to cover the in house credit control costs of the Company.
Debt Collection Clauses
for Terms & Conditions
Costs recovery clauses to assure a cost free
debt collection service
Download Now - it's Free!