Late Payment Demands

If your customers are paying their invoices late you may be entitled to claim compensation and interest for your outstanding invoices.

A Late Payment Demand contains similar information to an LBA but states that you are entitled to claim Late Payment Interest and Compensation under the Late Payment of Commercial Debts (Interest) Act 1998.

Why use a Late Payment Demand?

Late Payment Demands can be a cost effective way of recovering a contribution from the debtor towards your collection costs or even covering them completely. You are entitled to claim interest at 8% over Bank of England Base Rate and compensation of £40 – £100 for each unpaid invoice.

When can you use a Late Payment Demand?

You can claim Late Payment Interest and Compensation if:

  • You have supplied goods and services;
  • The debtor bought your goods or services for business purposes;
  • The contract is not a consumer credit agreement; and/or
  • The contract does not already contain a provision for interest on overdue invoices (or other remedy for non payment of invoices).

When can you not use a Late Payment Demand?

You may not be able to claim for Late Payment Interest and Compensation if the above do not apply to your contract with the debtor. However, you can still claim for contractual interest and/or contractual compensation in your LBA.

If we are unable to recover your debt through an LBA or Late Payment Demand, where appropriate, we will recommend follow-up litigation action through our solicitors. We will never commence any legal proceedings without discussions with the client who will always be kept informed.

A powerful alternative to issuing a Claim is to start insolvency proceedings. You can only do this for debts of £750 or more. To examine the pros and cons of Claims or Insolvency click here.

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