A time to reflect

As we approach the New Year we are faced with the inevitable economic downturn and the challenges that it will bring to both our own and our clients’ businesses. These challenges cannot be underestimated, but can be addressed and overcome by working together. Businesses can and should be taking action to ensure that they are in the best possible shape to get through it, by working together internally and with their chosen external partners.

2009 will see many more new challenges and projects, but one thing will remain constant, our commitment to provide quality, cost effective credit management solutions.

Christmas is a time to reflect, but also an opportunity to rest and spend time with friends and family. It is an opportunity to consider what lies ahead, but one cannot ignore the importance of taking time to enjoy the festive period and allow you to forget about work - just for a few days at least! So with the festive season approaching, I would like to thank our clients for their continued support and wish everyone a Merry Christmas and a Prosperous New Year.

Watmore markets Incasso LLP

Over the summer Clair Watmore took on a new role of Marketing executive within the Incasso Business Development Team.

 Bringing over 10 years financial services marketing experience, most recently as Senior Marketing Executive with Mortgage lender GMAC-RFC, Clair’s position as Marketing Executive will include maintaining and building relationships with stakeholders, developing advertising opportunities and our website, managing production of all marketing material and organising all corporate events. Clair will also contribute to and develop the longterm marketing plan and strategy to promote and build the Incasso LLP brand – we’re sure that you will notice the improvements that she is making very shortly.

Getting your interest

As a recession hangs like a rain cloud above our heads, the late payment of invoice debt affects more and more businesses. When you take into account that a recent survey showed that companies take more than a week longer to pay invoices than in 1998, it seems that the introduction of a late payment act had no effect.

Poor payment practice is costing UK business £20bn per year, according to a research commission by payments group Prompt Payer, with UK Payment Index and European Commission figures showing that nearly 50% of all invoices are overdue at any given time.

You may look to cover this in your terms and conditions of trading by providing that interest is due for late payment. However, how many times can you be certain, and your customer accept, that your terms and conditions do apply to the invoice debt? How many times have you charged the interest and recovered it?

There is an easy answer and it has been available to some businesses since 1998 and all businesses dealing with commercial debt since 1st November 2002. The Late Payment of Commercial Debts (Interest) Act 1998 gives you a statutory right to claim interest and reasonable Debt Recovery costs from commercial customers who pay late. The rate of interest is 8% above the Bank of England base rate so that, for example, the current rate, fixed to 31st December 2008, is 13%. The debt recovery costs are relatively small, ranging from £40 to £100, depending on the size of the debt.

Payment is late when the agreed credit period has expired or if no agreed limit, 3 days from the delivery of the goods or performance of the service or, if later, the day the customer receives notice of the debt.

To claim the interest all you have to do is notify the customer, preferably in writing. If part payment is made this is credited to the interest first and then the invoice debt.

However, the Act is unlikely to apply in your terms and conditions already make provision for interest of late payment, if those terms are incorporated into the contract with the customer for the supply of the goods o services. The lessons are simple if you want to maximise your cash recovery: Check if you have terms and conditions in your contracts that make provision for late payment.  If so, use them if not, apply the Act.  To simplify matters even further you may want to remove any clause in your terms and conditions that gives interest on late payment and apply the Act instead, either by incorporating it into your terms or conditions or allowing it to operate by default. Just beware in all cases that the customer’s own terms and conditions do not apply, if they give you interest for late payment or otherwise seek to avoid or restrict your ability to charge what is is a fair rate of interest for late payment.