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Impact of the Decision To Leave the EU

Impact of the Decision To Leave the EU

It is now clear that the British people have made the choice to leave the European Union. The countr...


New UK Legislation to Tackle Late Payment

New late payment legislation came into force earlier this month requiring companies that do not pay their suppliers on time to pay interest on the late payment as well as the costs incurred by the supplier in recovering the debt. The Late Payment of Commercial Debts Regulations 2013, which came into effect on 16 March 2013, implements the EU Directive on combating late payment in commercial transactions designed to make it easier to pursue payment and reduce the culture of paying late across the EU.

Under the new rules, public authorities must pay for goods and services that they procure within 30 days and, if they don’t, they will be obliged to automatically pay interest at 8% above the Bank of England base rate. The Government has maintained its requirement for all central Government departments to include a clause in their contracts that requires tier one (main) contractors to pay their supply chain within 30 days.

Businesses must now pay their suppliers within 60 days unless expressly agreed otherwise in the contract and provided it is not ‘grossly unfair’ to the supplier. In the event of late payment, the statutory interest rate of 8% above the Bank of England rate will apply unless an alternative ‘substantial remedy’ has been agreed in the contract.

To calculate interest on late payment, companies should add 8% to the Bank of England base rate, which is published twice a year on 30 June and 31 December, in effect at the time the debt becomes late:

Debt x interest rate x (the number of days late/365)

In addition to interest, companies can also claim a fixed amount of compensation depending on the size of the debt:

Up to £999.99 - £40
£1,000 - £9,999.99 - £70
£10,000 or more - £100

The new legislation supports the NSCC Fair Payment Campaign’s drive for fair payment throughout the supply chain and will help Specialist Contractors to get paid on time when trading within the EU. For further information on what it means for your business, download A User's Guide to the recast Late Payment Directive.

Source: HortiTrends News Room