{"id":184679,"date":"2023-12-03T23:11:44","date_gmt":"2023-12-03T23:11:44","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=184679"},"modified":"2025-03-27T15:15:10","modified_gmt":"2025-03-27T15:15:10","slug":"statutory-interest-late-payments","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/statutory-interest-late-payments\/","title":{"rendered":"What is Statutory Interest for Late Payment?"},"content":{"rendered":"\n

A customer\u2019s failure to pay their invoices on time can lead to serious cash flow problems for your business. This risk has become increasingly prevalent due to companies’ economic difficulties in the current economic climate. To help mitigate these risks, the law allows businesses to charge statutory interest for late payment<\/a> in certain circumstances. This article will explore the right to statutory interest for late payments and how it can benefit your business.<\/p>\n\n\n\n

When is Statutory Interest Relevant?<\/h2>\n\n\n\n

If customers pay late, your business can charge them interest for late payments. Often, businesses stipulate an interest payment clause in their commercial contracts<\/a>. An interest payment clause, in effect, requires your customers to pay interest on the amount owed. This is provided your customers make the repayment later than the pre-agreed time period.<\/p>\n\n\n\n

Including interest clauses in a contract can be a good way to prompt customers to pay on time. If customers can clearly see that they will be charged interest<\/a> if they pay late, they are more likely to settle their invoices when due to avoid further charges.<\/p>\n\n\n\n

However, not all commercial contracts set out an interest for late payments clause. In this case, businesses may be able to rely on the right to claim statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998<\/a> (The Act).<\/p>\n\n\n\n

The Act adds an implied term into specific business contracts for the supply of goods and services, giving businesses the right to claim interest and reasonable sums for recovering debt.<\/p>\n\n\n\n

What is the Statutory Right to Charge Interest?<\/h2>\n\n\n\n

Your business can claim interest under a business-to-business agreement<\/a> under the Act if the relevant contract falls under the Act\u2019s scope.<\/p>\n\n\n\n

At present, the rate of interest you can claim is 8% plus the Bank of England\u2019s base rate. It is also possible to claim for certain debt recovery costs.<\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n

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