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Late payment of a business invoice by an individual

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3 years 7 months ago #2101 by 05surveyor
I realise that the Late Payment of Commercial Debts (interest) Act applies to debts incurred by one nusiness to another business. However, if my Terms of Business signed by an individual include paragraphs specifically referring to payments being subject to the compensation and interest amounts applicable under the Act can I add these amounts for compensation and interest to the overdue invoiced amounts?

In this case the individual signed a contract agreeng to be bound by the Act, even though the invoice was to them as an individual.

Advice please.

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3 years 7 months ago #2103 by j.salmon@cpa.co.uk
Hi,

You can contractually set compensation for late payment. You can contractually state that if the invoice is not paid by the due date an addition charge of £x will be added to cover the reasonable cost of collection along with interest at x above base rates.

However you cannot contractually bind them to the act.

But if the charges are in your contract then you can enforce them contractually rather than enforce them as a statutory right.

James

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3 years 7 months ago #2104 by 05surveyor
Thank you James.

My contract as signed by the client contains this paragaph;

"7. Fees and disbursements
...........
d. The Expert reserves the right to charge to the Appointor the costs and expenses (including legal costs) of recovering late payments and to charge interest at the rate then in force pursuant to the Late Payment of Commercial Debts (Interest) Act 1998."

Is this enforceable in your opinion?

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3 years 7 months ago #2105 by j.salmon@cpa.co.uk
Yes, I think that is enforceable but you will have to demonstrate what your costs and expenses are.

If you used an external debt collector such as ourselves then those costs would be clearer than if you had to try and justify your own time and expense.

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3 years 7 months ago - 3 years 7 months ago #2106 by 05surveyor
Hi James, Thank you for this very helpful reply.

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