Late Payment: Late Payers Allowed 20 More Days To Pay In Q1 2015
Time From Invoice To Letter Before Action Increases 24% Year On Year
New figures on the amount of debt UK businesses are dealing with through late payment of their invoices throw into sharp relief the huge scale of the issue. With respected industry bodies such as The FSB and IoD calling for action, the new figures from Lovetts, the commercial debt recovery law firm, reveal suppliers are bank rolling their customers for an average of 103 days from the point they issue an invoice, before they threaten legal action with a Letter Before Action (LBA).This is a 24% increase on the amount of time the same sample waited in Q1 2014 when the time from invoice to LBA was 83 days.
From our figures, the scale of the late payment scandal in the UK is getting worse not better, despite the high profile campaigns to stamp out the problem. As the business climate improves, it seems that British businesses are reluctant to rock delicate client relationships by threatening legal action but their invoices will simply end up at the bottom of the pile. It’s vital that businesses act early on overdue invoices rather than delay. They also need to claim their right to compensation – not just for current customers but past customers who paid late too. It’s the only way the battle against habitual late payers can be won.
The Late Payment act allows any business paid late to claim interest for the period the debt was overdue, plus compensation. The entitlement to claim interest and compensation remains for six years on each and every invoice paid late, unless clear assent is proven against the claimant.
A growing number of businesses are now utilising the act to take on late payers, past and present and recovering significant sums to compensate them for the administrative and legal costs they have incurred chasing late payment. We want more companies to take action in this way – it will send a very clear message to late payers that delaying payment to their suppliers can seriously damage their bottom line.