Late Payment of Commercial Debts (Interest) Act 1998

The Act allows for businesses to charge interest on any late payments they receive from other companies or the public sector. The interest rate is set at 8% above the Bank of England’s base rate, with a minimum of £40. This means that businesses can recover the costs of borrowing from banks or other financial institutions when they have to wait for payments to be received.

It’s important to note that the Late Payment of Commercial Debts (Interest) Act 1998 only applies to businesses, not to consumers. This means that businesses can’t charge interest on late payments from individuals, but they can recover their costs in other ways, such as through fixed compensation.

In addition to charging interest, the Late Payment of Commercial Debts (Interest) Act 1998 also gives businesses the right to recover their costs of chasing late payments, such as through the use of debt collection agencies. This means that businesses can recover the costs of their time and resources when chasing payments that are overdue.

It’s worth noting that the Late Payment of Commercial Debts (Interest) Act 1998 only applies to debts that are incurred after the legislation came into effect. This means that businesses can’t claim interest on debts that were incurred before the legislation was introduced.

In conclusion, the Late Payment of Commercial Debts (Interest) Act 1998 is an important piece of legislation that helps to protect businesses from the effects of late payment. By allowing businesses to charge interest on late payments, and recover the costs of chasing those payments, it helps to ensure that companies are not unfairly penalised when they are owed money.