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Important Changes to Late Payment Legislation



The Late Payment of Commercial Debts (Interest) Act 1998 has been updated by the Late Payment of Commercial Debts Regulations 2013 which was adopted by England, Wales & Northern Ireland on 16th March 2013 and The Late Payment of Commercial Debts (Scotland) Regulations 2013 which came into force on 29 March 2013.

The Act continues to apply to contracts for the supply of goods or services where the customer is either a business or public authority and still imposes a statutory rate of interest of 8% over Bank of England Base on late payments unless the parties have agreed a substantial remedy. The Act has been amended so as to:-

Impose maximum payment periods.

If no payment terms are agreed, the default period remains at 30 days. However, payment terms must not exceed 60 days unless both parties agree and the extension is not grossly unfair. In the case of the Public Sector payment must be made within 30 calendar days of receiving the invoice.

Limit the amount of time a purchaser has to verify goods or services.

Where required, a procedure or verification period for goods or services must not exceed 30 days unless agreed and not grossly unfair to the creditor.

Increase the amount of payment enforcement costs a supplier can recover

Suppliers were already able to claim a fixed sum of between £40-£100 (dependent on the size of the debt) under the existing legislation to compensate them for the costs of recovering late payments.  The changes introduce the additional right for a supplier to claim the difference between the reasonable costs it incurs in debt recovery (eg for appointing a debt recovery company or lawyer) and that fixed sum.