Penalty for late payment of invoices

Hi Richard,

The Late payment of commercial debts Act allows you to add the compensation charges and you do not need to have it as a clause in your terms and conditions.

If an invoice under £1000 is paid late you can add £40 in compensation.

If an invoice under £10,000 is paid late you can add £70.

And if an invoice of £10,000 or more is paid late you can claim £100 in compensation.

This compensation is for your own efforts in collection.

You can also add any 'reasonable' third party collection costs.

You can also add interest.

The above compensation is successfully recovered all the time.

In theory you could set different fees in your terms and condition but you are potentially more likely to be challenged on it by your debtors and penalty clauses are unenforceable in uk law. The courts will ask you to demonstrate loses incurred as a result of the debtors actions to justify the damages you are claiming.

if you stick to the compensation awarded in the act then there can be no such challenge.