Ministers also want businesses to sign up to its Prompt Payment Code, which already represents about 60% of the supply chain value in the UK.

The Code is designed to encourage best practice and the Government is trying to set an example by pledging to pay 80% of invoices within five days.

These are welcome developments but whatever improvements can be made by central Government, firms will still have to police late payments themselves and take action when necessary.

Thankfully, there are lots of ways to deal with late payment problems if firms are prepared to exercise their legal rights.

It’s even possible to turn credit control into a profit making exercise because under the Late Payment of Commercial Debts (Interest) Act 1998, firms are allowed to charge interest on overdue invoices.

The e
xtra money recovered in this way is often more than enough to cover the cost of pursuing the debt.

The first step may be to simply ask your solicitor to draft a letter requesting payment and outlining what action may be taken if the debt is not settled.

Most people will pay up immediately when they see you are serious about exercising your rights, but for more hardened cases, it may be necessary to issue a ‘court order for questioning’ against the company secretary.

This is usually enough to prompt most late payers into action but for those who
still refuse to budge, there are various legal options available.

Firms should also be aware that they are protected from unilateral changes to contract terms such as when a customer decides that they are going to pay less than the amount agreed.

The supplier is entitled to insist on sticking to the original terms.

If one of your business customers does decide to pay less than agreed then you
will almost certainly be able to claim interest on the outstanding amount and impose a late penalty charge under the Payment of Commercial Debts (Interest) Act 1998.

Late payers put suppliers in a difficult situation and the dilemma is often one of
balancing the need to be paid on time with the need to maintain a good relationship with an important customer, but for those who feel the time has come to act, the law offers a considerable level of protection.

Please contact us if you would like more information about debt collection and credit control.

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