Using the Late Payment Act

The Late Payment Act - getting it right?

See how most businesses lose out on Late Payment Interest and Compensation

Late payment penalties can be claimed on all business-to-business (non-consumer) debts. For a commercial debt you can claim interest at the Bank of England's base rate plus 8 per cent, and compensation of £40 to £100 depending on the balance outstanding. These penalties must be paid by the debtor in addition to the principal debt. And you don't need to go to court to claim these costs - you have a statutory right to both. With Money Claim Manager these costs are calculated and applied to your Letter Before Action and Claim Form automatically.

EXAMPLE

Debt = £1,000, 90 days overdue, Base rate - 5%

Interest = £32.05 (@13%)

Compensation = £70.00

Total Late Payment Penalty = £102.05

Many claimants do not recover the full interest which accrues prior to the issue of their claim or post-judgment. This is usually because they don't realise they are entitled to it, they don't know how, or because they just can't be bothered working it out.

AN 'OPTIMISED' LETTER BEFORE ACTION

For businesses using the Late Payment Act, the Letter Before Action includes an automatic breakdown of interest and compensation to be paid by the debtor whether or not legal action is taken. In order to avoid a County Court Judgment and further costs penalties, the debtor must pay off the amount of the debt including any late payment interest and compensation. This is a powerful incentive for the debtor to pay. In most instances you'll get paid in full, including interest and compensation, without court action being necessary.

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Documents produced using this Site are valid for the laws of England and Wales.