Member Article

UK businesses not claiming their right to charge interest

UK businesses are failing to take advantage of legislation that protects them against slow paying clients, according to new research. Only 4% of businesses surveyed charged interest on late payments according to a poll by commercial credit agency Graydon UK. This is despite them being entitled to by the Late Payment of Commercial Debts (Interest) Act 1998.

A further 44% said they only occasionally added interest to outstanding trade invoices, leaving more than 50% who admitted to never charging interest. A quarter of the companies who never charged interest said they were worried about the extra administration that added charges would cause them, and 16% mentioned a fear of losing or upsetting clients.

Martin Williams, managing director of Graydon said: “The late payment culture in this country, particularly amongst large corporates who use their financial muscle to delay payments to suppliers, won’t go away in the foreseeable future, but there is an awful lot smaller companies can do to protect their cash flow in the meantime.

“Doing credit checks, chasing payments by telephone rather than by letter and ensuring that the client has received the right service prior to a due payment date are all useful tips, but ensuring that your payment terms and conditions include your right to charge interest on late payments, and that these terms are agreed upfront by clients, will empower you still further.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .