Late payments - advice & information
Late payment of invoices is a perennial problem for freelances, but the law does allow for some redress in the form of the Late Payment of Commercial Debts Act. This piece of legislation enables the charging of a late payment fee and also interest whenever a client fails to pay on time. Many NUJ members have used the law to good effect over the years.
The relevant piece of legislation is the Late Payment of Commercial Debt (interest) Act (1988). This was amended in 2013 in a very important way. Up until then, it was possible to claim a fixed recovery cost along with the appropriate amount of interest.
You can now claim your actual costs for recovering money from a client that pays late. The minimum amount of compensation you can claim remains set at £40 for debts up to £1000, £70 up to £10,000 and £100 thereafter. These amounts are on top of the penalty interest you can charge, which remains at 8 per cent over Bank of England base rate.
Payment is due 30 days after delivery of the work or delivery of the invoice, whichever is later.
Many NUJ members now state on their invoices that they will charge what they are entitled to by law, although this is not a legal requirement.
Of course, the question of whether to pursue a hitherto dependable client and risk ending the relationship will always be a difficult decision to make. This is especially true of the client pays the original invoice, but refuses to pay the late payment charges. The NUJ freelance office has had success in such instances.
It is an important rule of thumb, though, not to let a late-payment problem drag on. A quick reminder is essential, as the failure to pay is often due to an administrative error.
If the reminder does not produce results, you should contact the NUJ for advice/assistance. Chasing late payment is a daily occurrence for NUJ officials, and we help members recover literally thousands of pounds each year.
You can find more details about the legislation on the NUJ freelance branch website.
And the late commercial payments information on the government website.