JH LAW Solicitors

1. JH LAW Solicitors Make Cashflow YOUR king. Speaker: Marie-Claire Hoare  0845 638 4440

2. 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

3. JH LAW Solicitors • Late 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.  0845 638 4440

4. JH LAW Solicitors • What does the Act mean? • Unless terms and conditions say otherwise, the default credit term is30 days.  0845 638 4440

5. JH LAW Solicitors • What does the Act mean? • As soon as the payment is overdue, you are automatically entitled to compensation and interest on the debt.  0845 638 4440

6. JH LAW Solicitors • What 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)  0845 638 4440

7. JH LAW Solicitors • What Compensation? • It depends on the size of the debt.  0845 638 4440

8. JH LAW Solicitors • What Interest Rate? • The rate is fixed as the reference rate applying when the payment became overdue + 8%  0845 638 4440

9. JH LAW Solicitors • What Interest Rate? • The reference rate for 1st January to 30th June is:- • The Bank of England base rate on 31st December.  0845 638 4440

10. JH LAW Solicitors • What Interest Rate? • The reference rate for 1st July to 31st December is:- • The Bank of England base rate on 30th June.  0845 638 4440

11. JH LAW Solicitors What Interest Rate?  0845 638 4440

12. JH LAW Solicitors What Interest Rate? Example: “A” invoiced “B” £100 on 01.11.08 Credit term = 30 days Payment due on or before 01.12.08 Overdue on 02.12.08  Compensation £40  0845 638 4440

13. JH LAW Solicitors What Interest Rate? Example: Interest rate is the Bank of England base rate on 30.06.08 = 5% + 8% = 13 %  0845 638 4440

14. JH LAW Solicitors What Interest Rate? Example: Annual interest is: £100 x 0.13 £ 13  0845 638 4440

15. JH LAW Solicitors What Interest Rate? Example: Daily interest is: £ 13 ÷365 £ 0.04 (actually £0.0356 but round up)  0845 638 4440

16. JH LAW Solicitors What Interest Rate? Example: So as at today, the amount owed would be:- £ 100 principal debt £ 40 compensation £ 4.56 interest (£0.04 x 114 days (02.12.08 – 26.03.09) £144.56  0845 638 4440

17. JH LAW Solicitors How does this get you paid? It only will if you let customers know in advance the penalties they face if they don’t pay on time.  0845 638 4440

18. JH LAW Solicitors • How 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.  0845 638 4440

19. JH LAW Solicitors How 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.  0845 638 4440

20. JH LAW Solicitors • Useful Sources of information • www.payontime.co.uk • They 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.  0845 638 4440

21. JH LAW Solicitors and finally… HMRC Business Payment Support Service www.hmrc.gov.uk/pbr/2008/business-payment.htm  0845 638 4440

22. JH LAW Solicitors If 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.  0845 638 4440

23. JH LAW Solicitors Make Cashflow YOUR king. Thank you for listening.  0845 638 4440