We strongly recommend that our clients include provision for the recovery of debt collection fees. When these terms are present then our fees are recoverable from the debtor. In Business to Consumer relationships, it is only possible to recover debt collection costs with these terms present. In Business to Business relationships, if terms aren't included then the detail below, taken from gov.uk, are applicable.

  • Late commercial payments: charging interest and debt recovery

    When a payment becomes late you can claim interest and debt recovery costs if another business is late paying for goods or a service. If you agree a payment date, it must usually be within 30 days for public authorities or 60 days for business transactions. You can agree a longer period than 60 days for business transactions - but it must be fair to both businesses.

    If you do not agree a payment date, the law says the payment is late 30 days after either:

    • The customer gets the invoice
    • You deliver the goods or provide the service (if this is later)
  • Interest on late commercial payments

    The interest you can charge if another business is late paying for goods or a service is ‘statutory interest’ - this is 8% plus the Bank of England base rate for business to business transactions. You cannot claim statutory interest if there’s a different rate of interest in a contract.

    You cannot use a lower interest rate if you have a contract with public authorities. Check the current Bank of England base rate and previous rates.

    Example

    If your business were owed £1,000 and the Bank of England base rate were 0.5%:

    • the annual statutory interest on this would be £85 (1,000 x 0.085 = £85)
    • divide £85 by 365 to get the daily interest: 23p a day (85 / 365 = 0.23)
    • after 50 days this would be £11.50 (50 x 0.23 = 11.50)

    Send a new invoice if you decide to add interest to the money you’re owed.

  • Claim debt recovery costs on late payments

    You can also charge another business a fixed sum for the cost of recovering a late commercial payment on top of claiming interest from it. The amount you’re allowed to charge depends on the amount of debt. You can only charge the business once for each payment.

    Amount of Debt What You Can Charge
    Up to £999.99£40.00
    £1,000 to £9,999.99 £70.00
    £10,000 or more £100.00

    These amounts are set by late payment legislation. You can also claim for reasonable costs each time you try to recover the debt, this can cover any external debt recovery costs such as ours.

Our Simple 5 Step Process
Step 1:

We contact the debtor to say who we are, what’s owed and why.

Step 2:

We explain the need to pay, when to pay as well as how to pay.

Step 3:

We ensure that they understand how important it is to pay.

Step 4:

If it can’t be solved amicably we’ll advise on the next steps.

Step 5:

We manage the next stages for which could include legal action & enforcement.

Contact Our Team

We understand that we are representing our clients in their most valued relationships. It is vitally important to maintain trading relationships where possible. Our methodologies of open communication and a structured collection process maximises results whilst minimising reputational and relationship risks. Contact us to start the process of collecting your overdue customer payments.