Late Payers: Don’t Let Them Get Away With It!
Late payment for goods or services can be fatal for your business. That’s because financial liquidity is the oxygen that any business needs to survive. However, there is something you can do… Just take a look at Jane’s story:
Jane runs an artisan chocolate studio and was thrilled when a buyer from upmarket department store POSH ordered 10,000 Easter eggs. It was a huge order, but Jane managed to fulfill it by taking on extra staff. Easter came and went, and all the evidence showed that the product had been a big success – completely selling out. There was just one problem… Jane still hadn’t seen a penny from POSH, despite sending her invoice months ago. As the year wore on and payment still wasn’t made, the business began having cash flow problems. In fact, it looked like it could go under because of the late payment from POSH. That autumn Jane bumped into her old university housemate, Celeste, and the pair went out for lunch. Jane knew that Celeste was now a solicitor, but hadn’t realised the relevance for her situation. As Jane explained about the problem with POSH, Celeste’s expression became quite stern. “You can’t let them do this to you, Jane. This is your livelihood that’s at stake. You have to take legal action” – Celeste exclaimed. “But I can’t afford to go through the courts and take on the might of POSH” – Jane lamented. “Yes you can. There’s a law on late payment that is designed to protect people just like you – I use it all the time at work” – Celeste said. And sure enough she was right.
The Late Payment of Commercial Debts (Interest) Act 1998 was exactly what Jane needed to assist her in her debt collection efforts. Not only did she recover the full sum of the debt but she also received interest at 8% above the base rate, plus late payment compensation.
In addition to that, the Act allowed Jane to recover all her Solicitor’s costs plus her own in house administrative costs relating to the debt recovery process. What’s more, once POSH received the Solicitor’s Letter Before Action (LBA), it paid immediately, which meant nobody had to go to court. If you are in Jane’s position, then don’t let the situation continue a moment longer!
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