Late payers liable for 8% interest
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by Karen Miles • Sinai] hauliers have this week been given the statutory right to charge 8% interest on late payments following the introduction of legislation aimed at helping small businesses.
Operators with no more than 50 full or part-time employees have been given the right to charge 8% over base rate to large companies (with more than 50 employees) and publicsector organisations which fail to pay after 30 days—or a shorter contracted limit.
The ruling covers only those contracts entered into on or after 1 November 1998 and does not refer back to current outstanding payments. This Department of Trade and Industry initiative represents the first stage of the Late Payment of Commercial Debts (Interest) Act 1998. Its aims were promised in Labour's general election manifesto.
In two years' time the right to claim interest will be extended to all businesses against the private and public sector. And two years after that, public sector organisations will also be empowered to charge interest.
Hauliers frequently complain about late payment but critics of the act argue it will not alter the harsh commercial reality that many customers are more financially powerful than their transport suppliers.