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JH LAW Solicitors. Make Cashflow YOUR king. Speaker: Marie-Claire Hoare.  0845 638 4440. JH LAW Solicitors. Topics covered:- Late payment of commercial debts (interest) Act (as amended) What does the Act mean? What Compensation? What interest rate? How does this get you paid? - PowerPoint PPT Presentation

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  • JH LAW Solicitors

    Make Cashflow YOUR king.

    Speaker: Marie-Claire Hoare

    0845 638 4440

  • JH LAW Solicitors

    Topics covered:-

    Late payment of commercial debts (interest) Act (as amended)

    What does the Act mean?

    What Compensation?

    What interest rate?

    How does this get you paid?

    How to get paid?

    Useful sources of information 0845 638 4440

  • JH LAW Solicitors

    0845 638 4440Late payment of commercial debts (interest) Act (as amended)

    Only applies to business to business debts.

    Will be excluded if your/ their terms and conditions provide for something else.

  • JH LAW Solicitors

    0845 638 4440What does the Act mean?

    Unless terms and conditions say otherwise, the default credit term is 30 days.

  • JH LAW Solicitors

    0845 638 4440What does the Act mean?

    As soon as the payment is overdue, you are automatically entitled to compensation and interest on the debt.

  • JH LAW Solicitors

    0845 638 4440What does the Act mean?

    Even if the payment is then made, you can still persue them for the compensation and interest (but you may chose not to)

  • JH LAW Solicitors

    0845 638 4440What Compensation?

    It depends on the size of the debt.

    Size of unpaid debtSum to be paid to creditorUp to 999.99401,000 to 9,999.997010,000 or more100

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    The rate is fixed as the reference rate applying when the payment became overdue + 8%

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    The reference rate for 1st January to 30th June is:-

    The Bank of England base rate on 31st December.

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    The reference rate for 1st July to 31st December is:-

    The Bank of England base rate on 30th June.

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    PeriodReference RateInterest Rate (Reference rate plus 8%)1st January 30th June 20092%10%1st July - 31st December 20085%13%1st January 30th June 20085.5%13.5%1st July - 31st December 20075.5%13.5%1st January 30th June 20075%13%1st July - 31st December 20064.50%12.50%1st January 30th June 20064.50%12.50%1st July - 31st December 20054.75%12.75%1st January 30th June 20054.75%12.75%1st July - 31st December 20044.50%12.50%1st January 30th June 20043.75%11.75%1st July - 31st December 20033.75%11.75%1st January 30th June 20034%12%7th August 31st December 20024%12%

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    Example:

    A invoiced B 100 on 01.11.08Credit term = 30 days

    Payment due on or before 01.12.08

    Overdue on 02.12.08 Compensation 40

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    Example:

    Interest rate is the Bank of England baserate on 30.06.08 = 5% + 8% = 13 %

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    Example:

    Annual interest is: 100 x 0.13 13

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    Example:

    Daily interest is: 13 365 0.04 (actually 0.0356 but round up)

  • JH LAW Solicitors

    0845 638 4440What Interest Rate?

    Example:

    So as at today, the amount owed wouldbe:-

    100 principal debt 40 compensation 4.56 interest (0.04 x 114 days (02.12.08 26.03.09) 144.56

  • JH LAW Solicitors

    0845 638 4440How does this get you paid?

    It only will if you let customers know in advance the penalties they face if they dont pay on time.

  • JH LAW Solicitors

    0845 638 4440How to do this?

    agree payment terms at the outset.

    send a reminder setting out the compensation and daily interest that will apply if not paid within the credit period.

    be consistent.

  • JH LAW Solicitors

    0845 638 4440How to do this?

    These are all tasks which can be delegated to staff members, as long as they are told what they need to do.

  • JH LAW Solicitors

    0845 638 4440Useful Sources of information

    www.payontime.co.ukThey have a legislation and interest calculator which helps you work out what compensation and interest applies.

    www.berr.gov.uk/files/file37581.pdf A users guide to late payment legislation this has a very useful FAQ section.

  • JH LAW Solicitors

    0845 638 4440and finally

    HMRC Business Payment Support Service

    www.hmrc.gov.uk/pbr/2008/business-payment.htm

  • JH LAW Solicitors

    0845 638 4440If it would assist your business to defer paying your VAT, National Insurance, PAYE or Corporation tax then HMRC will agree to do this.

    But you need to contact them before the payment is due.

  • JH LAW Solicitors

    0845 638 4440

    Make Cashflow YOUR king.

    Thank you for listening.

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