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Debt recovery costs

  • Jenny Ward
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10 years 9 months ago #22 by Jenny Ward
Debt recovery costs was created by Jenny Ward
Do I add the debt recovery costs to each invoice amount or to the total amount outstanding? (several invoices)

Jenny

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10 years 9 months ago #23 by David J
Replied by David J on topic Re: Debt recovery costs
Hello Jenny

In the legislation users guide section , it states you have the 'right to claim reasonable debt recovery costs'.

For example, you have six unpaid invoices of £500.00, it would be seen as unreasonable by the courts if you made a claim for debt recovery costs of £40.00 for each invoice totaling £240.00.

Although this area of the legislation is a little grey, our advice is to total all the invoices together and make one claim for compensation. In this case £70.00.

As a reminder, the compensation varies according to the size of the debt.

Up to £999.00 = £40.00
£1000.00 to £9,999.99 = £70.00
£10,000 or more = £100.00

I hope this helps.

David

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10 years 9 months ago #47 by office@adminandsupportservices.co.uk
Whilst the Users Guide makes interesting reading, it is the legislation that is paramount.

The Late Payment of Commercial Debts Regulations 2002 (SI2002/1674) states:
Once statutory interest begins to run in relation to a qualifying debt, the supplier shall be entitled to a fixed sum (in addition to the statutory interest on the debt).
That sum shall be —
for a debt less than £1,000, the sum of £40;
for a debt of £1,000 or more, but less than £10,000, the sum of £70;
for a debt of £10,000 or more, the sum of £100.

Source: [img]http://http://www.opsi.gov.uk/favicon.ico SI2002/1674

A debt becomes a qualifying debt when it becomes overdue. Each invoice (if issued on different dates) would become overdue on a different date, and interest would be payable from a different date. And so, I read that each different invoice would incur a seperate £40/£70/£100 charge as soon as the invoice became overdue.

Not sure how the legislation could be read otherwise.

Of course, this could be an area of negotiation between the parties, but the legislation seems clear to me.


Philip

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10 years 9 months ago #52 by David J
Replied by David J on topic Re: Debt recovery costs
Hello Philip

When a business seeks to collect interest and compensation on multiple invoices, we recommend batching the invoice amounts together and making one claim for compensation.

The case that you put regarding debts on different dates qualifying for separate compensation claims is an interesting one. It's back to that word 'reasonable' which makes this area of the legislation unclear. What is classed as 'reasonable' compensation?

I remember reading a forum thread a while back where a business made a compensation claim on each invoice going back 6 years. I think the total claims was around £900.000! I think the thread died off but it would be interesting to know how successful they were.

It would also be interesting to hear from anyone reading this who had had success claiming compensation on each invoice.

We have had feedback in the past from businesses who have made claims for compensation on each invoice only to have the courts cut the compensation claim down to what they think is 'reasonable' compensation.

David

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10 years 9 months ago #55 by office@adminandsupportservices.co.uk

It's back to that word 'reasonable' which makes this area of the legislation unclear. What is classed as 'reasonable' compensation?


If primary legislation sets the amount of the compensation, then I'm not sure why a Court would need to consider whether or not this amount is reasonable compensation.

Parliament (via a Statutory Instrument / Act of Parliament) has set the figure. Surely the role of the Court is to apply and interpret the law; not to decide whether it is reasonable.

I'd be interested to know if a Court has ever decided to reduce the value of compensation entitlement below that allowed by law, and the reasoning the Judge gave for this.


Philip

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10 years 9 months ago #57 by Woodhead
Replied by Woodhead on topic Re: Debt recovery costs
The issue I have is that we had a customer that was expecting payment on a couple of invoices that had not been paid within the agreed 30 day terms unfortunately due to them not being authorised in time by our branch, so they missed our payment run but was automatically put onto the following months run. They did not accept this so they withdrew our terms and stated that all invoices were now due on receipt. Some of the invoices had not even been received but they advised us they would start charging interest on them immediately. We therefore cancelled our contract and the company billed us for the remainder of the hire period on a number of vehicles. Instead of doing one consolidated invoice they sent us 12 invoices dated 19/7/10 and 4 invoices dated 16/7/10 they are all under £1000.00 and one invoice is for £1.67 but they propose to charge us £40.00 for each invoice as compensation charge because we have no terms and therefore overdue after one day. We have actually paid these yesterday but they still intend to charge us £40.00 for each invoice plus interest.

Your comments would be much appreciated, is it worth us defending this if they decide to take us to court?

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