Don't let Late Payment become a habit

The Better Payment Practice Group (BPPG) is urging businesses not to let late payment become a habit. To encourage customers to pay up on overdue accounts, the BPPG has added a new template letter to its website which warns customers that future orders will be subject to interest and compensation charges in the event of late payment.

The new template letter has been designed specifically for use when no provision for contractual interest has been included in the contract, and when the issue of statutory interest and compensation has not been raised with the customer until they have defaulted on payment. It is important to note that creditors cannot charge statutory interest and compensation in addition to contractual interest.

Peter Rowe, Director General of the Institute of Credit Management and member of the BPPG commented: “It is best practice to refer to the right to statutory interest in your terms and conditions and other credit management documentation. This keeps relationships transparent and open and acts as a deterrent against paying late.

“If you choose to raise the issue of interest once a customer’s account has fallen into arrears, then it is important that they receive clear, written notification of the charges that will be due. The BPPG’s template letter demonstrates that this can be achieved succinctly and politely.”

This complements the advice already available on www.payontime.co.uk about the UK’s Late Payment Legislation, which was amended on 7th August 2002, entitling all businesses to claim interest and claim compensation for debt recovery costs from other late paying businesses.

Click here to view the letter titled 'Letter informing a debtor that statutory interest and compensation for debt recovery costs will be charged on all future orders'

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