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Businesses who encounter late payment problems have been given more protection, and the ability to claim higher levels of compensation, following the implementation of the EU Late Payment Directive, effective from 16th March 2013.

For contracts concluding after 16th March, reasonable costs of debt recovery (such as using a debt collection service) can now be added to the total being claimed from a client who has failed to pay an invoice within the pre-agreed time period.

The new late payment rules

In the UK, the new rules have been implemented via the Late Payment of Commercial Debts Regulations 2013, and several updates have been made to the Late Payment of Commercial Debts (Interest) Act 1998.


In summary this means that:


  1. Statutory interest can still be charged at 8% above the Bank of England base rate.
  2. A tiered system of fixed late payment charges applies depending on the outstanding debt; £40 on late payments up to £999.99, £70 on amounts from £1,000 to £10,000, and £100 on late payments above £10,000.
  3. Reasonable costs of debt recovery can also be added to the debt.
  4. All business contracts are automatically subject to 30-day payment terms, and are capped at 60 days ‘unless otherwise expressly agreed and provided such terms are not grossly unfair’.
  5. Public sector bodies across the EU will have to settle all invoices for products and services within 30 days.


With the cost of debt recovery now being passed to the late payer, the new rules should mean that the days of using unpaid invoices as cheap finance are coming to an end.


 Make sure you’re getting everything you’re entitled to – contact CPA today on 0808 149 7287

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