Did you know that even if a debt recovery invoice has been fully paid, you may still be entitled to claim compensation and additional interest?
If payment was received after the due date of an invoice then you could still claim between £40 to £100 in compensation per invoice. By issuing one of our Late Payment Demands we could recover money that you didn’t even know you were owed.
In light of the above you may wish to review your old invoices and see which ones were paid late. Your invoices may have been paid in full, but did you claim compensation for late payment?
Under the Late Payment of Commercial Debts (Interest) Act 1998, as amended, you are entitled to claim compensation and interest at 8% above the Bank of England's base rate on each of your late paid invoices.
Can I charge late payment interest and compensation once the debt has been paid?
You can claim interest and compensation on invoices that were not paid within the credit period but have been paid since then.
Interest can be claimed on the period starting with the date the invoice should have been paid and ending with the date when it was actually paid.
It’s important to remember that in most instances you have up to six years to claim interest and compensation.
How do I work out what I’m owed on invoices?
The interest you can charge if another business is late with their payments is statutory interest. As mentioned above, this is 8% plus the Bank of England base rate for business to business transactions. You cannot claim statutory interest if there’s a different rate of interest in a business contract which amounts to a substantial remedy.
For example, if your business is owed £1,000 and the Bank of England base rate was 0.5%:
The annual statutory interest on this would be £85 (1,000 x 0.085 = £85)
Divide £85 by 365 to get the daily interest: 23p a day (85 / 365 = 0.23)
After 50 days this would be £11.50 (50 x 0.23 = 11.50)
How much compensation am I entitled to?
The amount of compensation you can claim under the late payment of commercial debts (interest) act 1998, as amended is:
- For invoices or debts up to £999.99, you can claim £40 per invoice
- For invoices or debts between £1,000 - £9,999.99, you can claim £70 per invoice
- For invoices or debts over £10,000.00, you can claim £100 per invoice
You can only charge the business debtor once for each invoice payment.
