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Late payment legislation —does it work?
Page 40
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Substantial research into the effect of latepayment legislation on payment trends shows it is not entirely successful. Many smaller businesses are reluctant to threaten customers with statutory interest for fear of losing important contracts.
Research by the Credit Management Resource Centre showed the transport sector had the highest average payment beyond due date at 26 days— equivalent to a 30-day invoice not being settled for 56 days.
This study showed that every firm surveyed in the transport sector made its customers aware of the right to charge interest under the late-payment legislation in its terms and conditions. All the companies had also heard of the EC Late Payment Directive that came into effect in 2002.
The survey showed that 70% of the companies surveyed in the transport sector had been charged interest on late-payments by their suppliers.