Credit Management and the Late Payment of Commercial Debts

Corbitt, Terry
June 2003
Management Services;Jun2003, Vol. 47 Issue 6, p30
Academic Journal
In 1998 the European Commission submitted a proposal for an EC Directive to ensure a common approach across member states to the problem of late payment. The EC Directive on combating late payment entered into force following publication in the Official Journal of the European Communities on 8 August 2000 and was implemented by all member states by 8 August 2002. The Great Britain government had already recognised the problem and had introduced the Late Payment of Commercial Debts (Interest) Act of 1998 to give businesses a statutory right to claim interest at the statutory rate on bills paid outside agreed credit terms or 30 days if no terms have been agreed. The statutory right to claim interest is not compulsory. It is for the supplier to decide whether or not to make a claim for interest. Before this Act businesses were only able to claim interest on late debts if it was included in the contract or if they pursued the debt through the courts and the courts awarded interest. The Late Payment of Commercial Debts (Interest) Act was introduced on 1 November 1998 to encourage purchasers to pay on time by giving businesses the right to claim interest if another business pays its bills late.


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