Cash is king – and that has never been truer than in the current recession. If you do have unpaid bills, remember that it is your money your customers are holding onto. You have a legal right to charge interest on unpaid bills for business clients and doing so produces two dividends:
- As your clients see their bill gradually mounting, it is a strong incentive to pay.
- If your clients do delay paying, then at least you get some return on the hit to your cashflow.
There is no need to even refer to your right to charge interest in your terms and conditions – it is automatically implied. You can charge 8% above the Bank of England's Base Rate from time to time, no matter how large or small the debt is. You can also set your own rate of interest, which need not be the same as the 8% above Bank of England base – however, if you do, the statutory 8% above Bank of England rate does not apply, so be careful your own rate is not too excessive or your client could go to court to challenge your interest rate. To tighten your debt recovery systems, click here for more information on how to calculate interest due.
For legal advice in Salisbury, contact us today.
