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Interest Rates

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13 years 5 months ago #264 by Ferret
Interest Rates was created by Ferret
If a Company owes me for invoices covering 18 months, and the oldest invoice attracts interest of 5% (base rate), will the same rate apply for later invoices, even though the
the base rate has decreased?

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13 years 5 months ago #265 by David J
Replied by David J on topic Re:Interest Rates
Hello Graham
The reference rate is set on the date that the debt becomes overdue. That reference rate will stay the same, even if the reference rate goes up or down, throughout the life of the debt.
So to answer your question, the reference rate for each of your invoices will change according to the date they became late.

Below is from our FAQ page.

I hope that makes sense!

Regards

David

For contracts dated 7th August 2002 and onwards, businesses are entitled to charge 8% above the reference rate that is in place on the day the debt becomes over due.
The reference rate is set for six month periods, so the Bank of England base rate that is in place on the 31st December will be the reference rate for the period 1st Jan - 30th June, and the BoE base rate that is in place on 30th June is the reference rate for 1st July - 31st December.
For instance as at 20th June 2010, the BoE base rate was 0.5%. This means therefore that for the period 1st January - 30th June 2010, businesses will be able to charge 8.5% late payment interest.
There is no need to adjust your interest rate if base rate moves - you use the one in place when the debt becomes overdue.

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  1. Discussions forums
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  5. The late payment of commercial debts (interest) Act.
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