Interest rate rises could help SMEs tackle late payment
When interest rates change there’s always talk of the winners and losers of the situation. Savers benefit from an increase whilst borrowers are worse off.
But an increase also brings an advantage for businesses who have been struggling with late paying customers, one which might not have been immediately obvious.
Will you benefit?
It all relates to a piece of legislation that many businesses are aware of, but don’t always apply. It’s called the Late Payment of Commercial Debts (Interest) Act, which gives businesses the right to charge their customers compensation and statutory interest on any overdue invoices to help cover debt collection costs.
An interest charge of 8% plus the Bank of England Base Rate applies from the day the debt becomes overdue, whilst you are also eligible to claim debt collection costs of at least £40, depending on the invoice’s value.
Therefore, any interest rate rise gives SMEs extra leverage when chasing late payments – and debtors more reason to pay their overdue bills faster.
On Thursday, the Bank of England increased interest rates for the 10th time in a row, to 4%, and they could go higher still as the Bank attempts to tackle inflation.
At a time where SMEs are really feeling the strain of late payment, it could be a helping hand in chasing overdue invoices.
How much could you charge?
To calculate how much late payment interest you are eligible to charge on overdue invoices simply use our tool below.
Please note: If you’re experiencing problems please click here to use the tool.
Need assistance recovering overdue invoices?
If your business has any overdue invoices you’re struggling to collect from customers. we can help.
An experienced and award-winning debt collection agency, our debt recovery services are not only conducted on a success basis, meaning you only pay in proportion to what we collect, in many cases we can additionally recover statutory late payment interest and compensation on top.
With a proven track record of delivering results for our clients, instructing us can also give you back the time to focus on the rest of your ledger – and growing your business.
Click here to get an instant, no obligations debt collection quote, or call our team 0800 9774848 to discuss your options.