If
you suffer from late payments, the Late
Payment Interest rules are there to help you
get paid on time and adequately compensated.
Yet a surprising number of small businesses
do not know how to calculate late payment
interest; increasing the chances of delayed
payment affecting their cash flow.
The Better Payment Practice Group (BPPG)
asked 419 businesses if they knew how to
calculate late payment interest, and 49%
said they did not. This figure is better
than in 2004, when only 25% knew how to
calculate it; but still demonstrates that
more needs to be done to teach small
business owners on the subject.
The smallest companies (0-9 employees) were
the least likely to know, which is bad as
late payment will affect the cashflow of the
smallest companies much more than larger
companies.
Richard Wilson, member of the BPPG and Head
of Business Policy at the Institute of
Directors, commented:
“We believe
that the threat of charging interest is
potentially an effective deterrent against
late payment and encourage all businesses to
understand their rights under the late
payment legislation and include their
entitlement to claim interest and
compensation in their terms of trade.
If you do not know how to charge late
payment interest, then you should find out
now. It is not difficult to work out, and
knowing it could help prevent your customers
paying late in the future.
Find out more about
Late Payment Interest in our article here.
Our free BizStart24
software includes a Late Payment Interest
calculator, as well as letters to help you
chase up overdue invoices.
