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How to ensure your bills are paid on time

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By Michael Evans  15.03.09

Credit is difficult for everyone at the moment and getting your invoices paid promptly is one of the best ways to protect your own cash flow. There are a number of key points to bear in mind when it comes to payment issues. Perhaps the first is to investigate trade (or business) credit insurance: premiums (based on a percentage of receivables) may be expensive these days (or you may not be able to get cover at all) but compared to the risk of non-payment this may be a cost worth considering.  Insurers will usually cap the credit they will allow for each customer and this may a useful actuarial guide to the risks you are facing.

Payment of properly rendered invoices is due when the contract says it is due, or within a reasonable time if the contract is silent. You can claim statutory interest at (currently) 8% over base rate unless another rate has been expressly agreed.

"If the debt is for more than £750 and is undisputed, consider issuing a statutory demand, which is a form prescribed by the Insolvency Act 1986 summarising what is owed.  A statutory demand is a powerful threat which may damage your relationship with your customer, but can be very effective in persuading a creditor to pay up.  If it is not paid within three weeks, this may be the basis to found a bankruptcy petition against the creditor and eventually having them wound up.”

“A court can also award interest on a debt; failure to pay a judgment sum may be contempt of court, and may even result in a prison sentence. In addition to taking a late payer to court, you can withhold further goods or services already ordered and/or refuse to supply future orders; or require payment in advance for any future orders.

“Finally, remember that you may be able to claim back your goods, depending on the contract terms.”

© Davenport Lyons 2009. All rights reserved.

This document reflects the law and practice as at March 2009. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.


About the Author

Davenport Lyons [www.davenportlyons.com] is an international business law firm based in the West End of London. The firm has an excellent reputation in areas spanning corporate to property, defamation to intellectual property, music to film finance and digital rights to sport.


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Article Published/Sorted/Amended on Scopulus 2009-03-26 01:14:35 in Legal Articles

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