8% - a guide or compulsory

Hi there,

I've recently set up as a freelancer and consultant and my professional body has given me a standard contract to use. It has a clause for late payment ssaying something about 4% above BoE base rate.

A client has just asked as part of contract negotiations to knock this down to 2.5% which prompted me to look it up and I've found this legisalation.

All new to me.

So, is the 8% a guide or compulsory? I want to go back and say "actually thanks for asking, I'll be popping that up to 8% now you mention it"

Or do I change the term to say "The Late Payment of Commercial Debts (Interest) Act 1998 applies here"

Any advice you can give a new starter will be much appreciated!

Thanks

Beth

8% above base is the statutory interest that can be charged. However, if you negotiate less, then that is fair enough, but the penalty for late payment should be substantial.

The compensation charge of £40 per order is generally more than the interest, unless the invoices are large.

You might say, yes I will accept 2.5% for any invoices paid outside terms, plus compensation, for the 1st 10 days over due, then after that it will be 8%.

THE RATE SHOULD REFLECT COMPENSATION FOR HOW LATE THE PAYMENT IS.

NOTE THAT IF YOU ARE LATE WITH YOUR VAT RETURN YOU COULD RECEIVE A 15% CHARGE - SUBSTANTIAL - LATE PAYMENT IS TO TEACH PEOPLE NOT TO PAY LATE, BUT IT DOESNT SEEM TO WORK YET :-(