Did you know you are entitled to claim interest and compensation?

When debts become overdue, chasing for payment can become time consuming and an unwelcome distraction from the daily running of a business. Claiming interest and compensation is a useful way of helping to deter future late payments whilst compensating businesses for their inconvenience.

Interest
As part of a businesses terms and conditions/contract there may be an express clause that states that the business can claim interest and details how much can be claimed and at what rate.

If this is not the case and there is no such clause, where invoices relate to the supply of goods or services, businesses can rely on the Late Payment of Commercial Debts (Interest) Act 1998. Under this act, businesses are allowed to claim interest at 8% per annum over the Bank of England base rate from the date the invoice fell due until the date the claim is made.

Compensation
In addition to interest, businesses are also entitled to claim compensation on each individual overdue invoice.

If the invoice amount is for a debt less than £1,000, £40 compensation may be claimed, if the invoice is for a debt of more than £1,000 however less than £10,000, £70 compensation may be claimed and if the invoice is over £10,000 then £100 compensation may be claimed.

Interest and compensation can be claimed up to six years later, although we recommend addressing the issue as soon as it arises.

This article was written by Sophie Taylor, a legal assistant in our debt recovery team. For more information about high court enforcement, contact slt@debenhamsottaway.co.uk or call 01727 735632.