The United Kingdom was one of the first countries in the European Union to implement late payment legislation to help promote a culture of prompt payment. There has been a statutory right to interest for late payment for small firms owed money by large firms or the public sector since 1 November 1998, when the Late Payment of Commercial Debts (Interest) Act 1998 came into force.
On the 7th August 2002. it was ammended to allow small businesses to charge each other statutory interest, as well as large businesses and the public sector, for the late payment of commercial debt.
On the 16th March 2013. Further amendments were made.
The public sector must pay within 30 days and private sector within 60 days.
Payment times for both can be negotiated.
Additional fees can be claimed if the current compensation fees to not cover recovery costs.
A verification period on goods or services could not exceed 30 days unless agreed and not grossly unfair to the supplier
What is meant by "late payment legislation"?
The phrase "late payment legislation" refers to the amended Late Payment of Commercial Debts (Interest) Act 1998, the Late Payment of Commercial Debts Regulations 2002 and the Late Payment of Commercial Debts Regulations 2013
The statutory right to claim interest, compensation and the other entitlements are not compulsory and it is for the supplier to decide whether or not to use rights made available. Part of maintaining any successful business is good cashflow management and the late payment legislation can help you with your credit management.