Six Months and Counting…….

Small Businesses To Charge Small Businesses Interest on Late Paid Debts In November – Find Out the Facts

The Better Payment Practice Group (BPPG) is urging small businesses to find out more about the forthcoming second tranche of the Late Payment of Commercial Debts(Interest) Act 1998. Currently, small businesses are only able to levy interest against large businesses and the public sector, limiting the opportunity to apply the legislation. With effect from 1st November 2000, the situation will change dramatically as small businesses will be able to claim from other small businesses on debts incurred under contracts agreed after that date.

Research by the Credit Management Research Centre at the University of Leeds shows that there is a growing trend amongst small businesses to exercise their right to charge interest, with one in ten (11%) firms stating that they plan to use the legislation. It is anticipated that wider application of the right to interest will accelerate the process of using the legislation, as it becomes a more accepted tool in credit management.

Nick Goulding, member of the BPPG representing the Forum of Private Business, comments: "Small businesses should start preparing now. The legislation is an important tool in the credit management process. Far too few firms actively control the trade credit they issue let alone effectively collect debt owed. Help is at hand from the BPPG and other sources. Don’t wait until you have a major problem before tightening up on late payment. After all, it is your money."