January 01 2018
The Bank of England raised its base rate on November 2nd and today those higher interest rates feed through into the statutory interest that can be added to late payments.
Under the rules established in the Late Payment of Commercial Invoices Act 2013, statutory interest on late payments is set at 8% plus the reference rate on the day the invoice became due. The reference rate is set on December 31st and June 30th each year as the Bank of England base rate prevailing at the time.
See our article explaining how to add interest to overdue invoices, or alternatively you can use our simple calcultor.
This means that invoices that become overdue from January 1st 2018 onwards will be subject to statutory interest at 8.5% compared to 8.25% for invoices that were due in 2017.
Samantha White, CEO of My Credit Controllers commented:
"While the new rate of interest is not significantly higher than before adding interest to late payments sends a strong message to delinquent debtors that you will not finance their business free of charge. We encourage all our clients to add interest and compensation payments to unpaid invoices, if only to focus the minds of your debtors."
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