Late payments causing you a headache? Securing remuneration could be easier than you think
This article first appeared in Your Business magazine in July 2018.
For many businesses, maintaining the balance between timely payments and healthy customer relationships can often feel like a difficult task. But in 2018, speeding up the payments process can be much easier – and more straightforward – than you might think.
At Lovetts, we offer a letter before action for as little as £1.50 plus VAT. This secures payment within 86% of our cases.
If you have customers that pay late, it is your right to claim interest and compensation to help ease your inconvenience. Under the Late Payment of Commercial Debts (Interest) Act 1998 and subsequent regulations, you can claim interest and receive fixed-sum compensation if payment isn’t received.
Compensation brackets are as follows:
£40 for invoices up to £1,000
£70 for invoices between £1,000and £10,000
£100 for invoices over £10,000
Our research has shown that the perception amongst 58% of businesses is that chasing late paying customers through Solictors could damage relationships with their customers. This fear is unfounded because in our experience customers have no objection to paying what is rightfully due to our clients and the relationship between the two parties continues with future trading.
By failing to deal with late payments, businesses are suffering financial damage by not asserting their late payment law rights. Late payment doesn’t only affect your bottom line – it can also put your cashflow and day-to-day operations at risk and threaten your survival. It’s important to get what you’re owed without unnecessary delay, and taking a professional approach to this process is vital.
“As solicitors, we’ve found that correspondence from us is far more effective in moving a late payer to action,” says Michael Higgins, Managing Director for Lovetts. “Reminder letters from businesses that are owed can often be ignored, while notifications from debt recovery agents are not always welcome. So when looking at late payments as part of the wider accounts cycle, solicitor assistance can be extremely useful. Furthermore, thanks to the efficiency of the Lovetts business model, obtaining the added impetus to pay that comes from a solicitor’s involvement has never been more cost-effective.”
Lovetts Chairman, Charles Wilson, highlights the necessity of a personalised service: “For me it was important that a client could get exactly what I would want. In 2013, we had to harmonise our law with European legislation. We were able, by statute effectively, to have recovery costs included as a right. So, if a client is entitled to claim compensation and interest they could also recover their recovery costs. And why shouldn’t the debtor pay? They are the one who caused the problem.”
With the advancements that have taken place in digital commerce in recent years, business-to-business transactions are now being completed more easily and swiftly than ever before. In 2018, securing late payments could also have become more straightforward than you previously thought.