In difficult times good cash flow is particularly important so businesses need to be reminded of the provisions of the Late Payment of Commercial Debts (Interest) Act 1988.

This provides that subject to meeting certain criteria businesses may claim interest on outstanding invoices owed by another business even if  there is no express agreement between the parties for this.

As well as charging interest at 8% above the Bank of England base rate the business that is owed can claim compensation ranging from £40.00 to £100.00 per invoice.

Peter Morgan, partner specialising in commercial litigation comments “The provisions of the Act are particularly welcome in times like these where trading conditions may be difficult as it not only compensates businesses for late payment but also provides added incentive to encourage the slow payer to clear its debts. We regularly advise commercial clients on the use of this little known Act as an effective means of cost recovery.”