News: Oxley & Coward on late payment culture
Rotherham's Oxley & Coward Solicitors has highlighted the changes to the law that aim to eradicate the culture of late payment found in Europe and the UK.
More power is being given to suppliers who are pursuing debts with commercial businesses now expected to pay supplier invoices within 30 days, unless both agree a longer (60 days maximum) time limit.
Statutory interest will now be a minimum 8% above the European Central Bank's reference and interest will start to run automatically if the period for payment is not specified, or where it is deemed to be "grossly unfair." Interest charges will automatically kick in at 30 days from the latest date of receiving the supplier's invoice or receiving or accepting goods or services.
The right to claim compensation for reasonable costs incurred in recovering a debt is another important change that now takes effect when the amount exceeds the established fixed charge sum of 40 Euros.
Amy Cusworth, employment law specialist at Oxley & Coward, said: "This law sends a strong message to those who fail to meet debt obligations within an adequate time frame. But business needs to recognise the new provisions will not apply to contracts made before 16 March and your contract terms, or the terms imposed by the customer must not override the legislation if you want to make use of it."
The updated legislation made under Directive 2011/7/EU will be implemented in the UK using S1 2013/395 under The Late Payment of Commercial Debts Regulations, 2013 and creates a powerful new incentive for debts to be settled within the new 30 day period.
"As well as the tighter control of the length of time customers can take to pay an invoice, the law is on your side to claim a more generous rate of interest on late payments," added Amy. "At 8% this is considerably higher than most current commercial contracts, but if you have, say, a lower rate of interest hidden away in your contracts, you will not be able to claim this new statutory rate so the message is you should now be checking your contractual small print carefully!"
Oxley & Coward website
More power is being given to suppliers who are pursuing debts with commercial businesses now expected to pay supplier invoices within 30 days, unless both agree a longer (60 days maximum) time limit.
Statutory interest will now be a minimum 8% above the European Central Bank's reference and interest will start to run automatically if the period for payment is not specified, or where it is deemed to be "grossly unfair." Interest charges will automatically kick in at 30 days from the latest date of receiving the supplier's invoice or receiving or accepting goods or services.
The right to claim compensation for reasonable costs incurred in recovering a debt is another important change that now takes effect when the amount exceeds the established fixed charge sum of 40 Euros.
Amy Cusworth, employment law specialist at Oxley & Coward, said: "This law sends a strong message to those who fail to meet debt obligations within an adequate time frame. But business needs to recognise the new provisions will not apply to contracts made before 16 March and your contract terms, or the terms imposed by the customer must not override the legislation if you want to make use of it."
The updated legislation made under Directive 2011/7/EU will be implemented in the UK using S1 2013/395 under The Late Payment of Commercial Debts Regulations, 2013 and creates a powerful new incentive for debts to be settled within the new 30 day period.
"As well as the tighter control of the length of time customers can take to pay an invoice, the law is on your side to claim a more generous rate of interest on late payments," added Amy. "At 8% this is considerably higher than most current commercial contracts, but if you have, say, a lower rate of interest hidden away in your contracts, you will not be able to claim this new statutory rate so the message is you should now be checking your contractual small print carefully!"
Oxley & Coward website
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