Interest Rate - customer proposing different?

Hello Simon

Thanks for the compliment and passing on the sites details.

The legislation sets a default of 30 days before an invoice becomes overdue. You are of course entitled to agree your own terms and you can agree 45 days.

Interest under the legislation is set at 8% plus the current interest rate within a 6 month period. Currently it is 8.5% and is calculated on a daily rate as follows.

Debt times interest rate divided by 365 times the number of days late

Plus of course to that you can add a compensation fee of £40.00, £70.00 or £100.00 depending on the size of the debt.

To deviate away from that could be classed as unfair and challenged through the courts but that is ridiculous as no one is going to do that. So it is going to be down to you to negotiate. I would use the legislations rate as that has become the standard. Though again, you can agree your own terms.

If you feel that they may be late payers then make sure you make the correct credit checks first and perhaps limit their credit until they have proved themselves. Also make sure your terms are the the ones that are agreed and signed. If you are confident in your service and products (which I'm sure you are!) stick by the terms that you want. Only you can make that call though.

Regards

David