Our Late Payment Policy Explained

Learn how Customs Manager Ltd handles late payments, interest charges, and debt recovery to protect business cash flow and fairness.

Late payments cause serious disruption to cash flow and place an unfair burden on businesses. At Customs Manager Ltd we take timely payment seriously and apply the Late Payment of Commercial Debts legislation to protect our business and ensure fair practice across all transactions.

When a Payment Becomes Late

All invoices must be paid within the agreed contractual terms. If no date has been agreed, a payment is officially late 30 days after the customer receives our invoice or, if later, the date when goods or services are delivered.

A longer payment period can only be agreed if both parties expressly accept it and it is fair to both sides.

Interest on Late Payments

If a payment is overdue, we charge statutory interest as set out in law. This rate is fixed at 8% above the Bank of England base rate and is calculated as simple interest, not compound interest. This charge applies automatically, unless a different contractual rate has been agreed.

For example, if a client owes £1,000 and the Bank of England base rate is 0.5%, the statutory rate becomes 8.5%. That equals £85 in annual interest, or £0.23 per day. After 50 days of delay, the additional charge would be £11.50. A new invoice will always and automatically be issued when interest is applied.

Debt Recovery Costs

In addition to statutory interest, we are entitled to claim fixed compensation for the cost of recovering late payments.

The law sets out the following charges:

• £40 for debts up to £999.99

• £70 for debts from £1,000 to £9,999.99

• £100 for debts of £10,000 or more

  
  

These amounts apply once for each late invoice. If we incur additional reasonable costs in recovering the debt, these may also be charged to the debtor.

Why the Law Exists

The Late Payment of Commercial Debts (Interest) Act 1998, together with the 2002 and 2013 Regulations and the EU Directive 2011/7/EU, provides the legal foundation for this policy. The legislation was introduced to stop late payment being used as a financial tool, to encourage a culture of paying on time, and to protect suppliers, particularly small and medium-sized enterprises, from unfair practices.

Our Approach

While we strive to resolve disputes amicably and are open to alternative dispute resolution, including mediation, Customs Manager Ltd enforces this policy consistently.

Our process follows clear steps: first, we will send up to two friendly reminders requesting payment. If payment is still not received, a final formal reminder will be issued, notifying the client of the outstanding debt. This may serve as a letter before claim if the matter escalates to court.

If the debt remains unpaid, we may initiate a court claim or refer the matter to a bad debt recovery agency. Interest and recovery charges will always be applied when payment terms are breached. Legal action may follow if debts remain unresolved.

What it means to be a Bad Debtor with us

Customs Manager Ltd reserves the right to classify a client as a bad debtor if invoices remain unpaid, including accrued interest and recovery fees. Once classified as a bad debtor, we will immediately suspend all work for that client until the debt is fully settled. No services, ongoing or new, will be provided during this period.

For future engagements, the standard 30-day credit period will be waived, and full upfront payment will be required before any work can commence. Additionally, we reserve the right to refuse future services to clients who have been classified as bad debtors. These measures are necessary to protect our business and ensure all clients are treated equitably.

Conclusion

Prompt payment is not only a legal obligation but also the foundation of trust and stable business relationships. Customs Manager Ltd expects all clients to respect these terms to maintain a fair, reliable, and professional trading environment.

Interest and recovery charges will always be applied when payment terms are breached. If debts remain unpaid, legal action may follow.

Prompt payment is not only a legal obligation but also the foundation of trust and stable business relationships.

Late payments can jeopardize business operations and relationships. By applying statutory interest and recovery charges, Customs Manager Ltd ensures fairness and protects its cash flow.

Recommendation

Businesses should pay invoices promptly to avoid additional charges and maintain strong supplier relationships. Clear payment terms and timely invoicing are key to avoiding disputes.