The late payment legislation provides businesses with a statutory right to claim interest and compensation on overdue commercial debts.

From 1 January 2005, interest can be charged at the rate of 12.75%. Previously the rate was 12.5%. The interest rate is set twice a year and is calculated by adding 8% to the Bank of England base rate. The rate will next be reviewed on 1 July 2005.

Of course it is much better if payment is made on time in the first place. The Better Payment Practice Group has undertaken a survey of companies and found that four out of five now accept payment by electronic transfer from their business customers. In addition, two thirds of those using this form of settlement found that it reduces late payment

source: Cook and Partners accountants