Advice On Calculating Late Payment Costs
Most business owners have experienced a late paying client at one point or another. Trying to recover the money can be a frustrating, time consuming and sometimes even a costly process.
The latter can often put people off pursuing debts for fear of losing more money than the amount they are trying to recover. Fortunately, this is unlikely to be the case when you can add your recovery costs and interest onto the bill. This right is in fact a legal one and you will find that the law will almost certainly be on your side if you can prove that the money is owing and that there is an agreement between you and your client – even if that agreement isn’t put down in writing in some cases.
You can actually start the process of debt recovery the day after an agreed credit period if such an agreement exists. If not, then the debt will be classed as overdue at the end of a 30 day period after the invoice was sent.
Interest on the debt is charged at 8% plus the bank of England base rate and you can add this on daily until the debt is settled. As mentioned you are also entitled to claim costs on top of this including the services of a debt recovery agency. So ultimately you may recoup most of the costs of recovery and get paid what you are owed.