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Businesses receiving payments late, could be forced to close - Research by the Federation of Small Businesses shows

Businesses receiving payments late, could be forced to close - Research by the Federation of Small Businesses shows

A recent study conducted by the Federation of Small Businesses shows that 8% of small businesses face going out of business this year because they receive late payment from their clients. 

The research shows that 440,000 firms could shut this year because of late payment, with those surveyed saying that the late payments were now threatening their viability of their businesses. 

The study by the FSB of more than 1,200 business owners found that close to 1 in 3 had seen late payment of invoices lengthen over the last 3 months.

What legal rights do businesses have for late payers?

The UK Late Payment Law says that all businesses have the right to charge their clients interest on late payments unless otherwise agreed. The law clearly states that payments must be received in the first 30 days of sending the invoice or delivery of goods or services, whichever one is later.

How many days until payment is considered late?

Each business will have its own payment terms and individual collection processes. But in general terms, if a client does not pay the invoice within 30 days of receiving it, then this is officially classed as a late payment. 

Businesses may also sometimes offer incentives for early payments and upfront payments.

What if my client is still not paying the invoice?

In worst case scenarios, there are usually two options for consideration. LBA or Letter Before Action – this is a letter that is usually written either by a lawyer or debt collection agency, here at CP Law Associates our debt collection lawyers can help you to obtain one. It is sent to the debtor to inform them of the forthcoming court action if the payment is not received in the next 7 days. 

LBD or Late Payment Demand, allows you to make an interest claim, compensation and any other reasonable costs that may have been accrued whilst collecting the late payment.

How CP Law Associates Can Help You

The process of collecting late payments and debts can be quite complicated, we suggest that to do it professionally and legally that you speak to our team at CP Law Associates. 

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