Law firm urges compensation claims against
late payers
Businesses should use their right to claim
interest and compensation from late payers, says Lovetts
Businesses suffering from late payment
should exploit their right to charge interest and claim
compensation, says a major debt recovery law firm,
Figures from Lovetts show that only just over one in
three firms that lodge legal claims against late payers
had late payment interest (LPI) or compensation applied.
''In Q1 2008 only 31% of our activity had late payment
interest (LPI) applied, in Q1 2009 it was closer to
37%,'' says Charles Wilson, chairman and managing director
of Lovetts.
''This is certainly encouraging but clearly there is
still much work to be done in encouraging more businesses
to claim compensation and interest and thus adopt this
effective deterrent against persistent late payment
in to their credit control procedures.
''The fact is, the use of late payment interest has
taken a long while to be accepted by many companies.
Ignorance of the legislation, how it can be adapted
by individual companies and a fear of alienating clients,
may be partly to blame and inevitably it is the micro
SMEs that are most affected.''
Businesses can claim LPI and compensation if:
-They have supplied goods and services
-Their buyer bought for business purposes
-The contract is not a consumer credit agreement
-The contract does not contain a provision for interest
on overdue invoices (or any other substantial remedy
for non payment) Businesses cannot claim LPI and compensation
if the terms of business already provide for contractual
interest on overdue invoices.
-Compensation can be claimed for every invoice that
was not paid within the credit period.
-Compensation can be claimed even if the invoice has
now been paid.
-Businesses have up to six years to claim the compensation.
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