Protect yourself against late payment

Late payment is an issue which many SME businesses are horribly familiar with and new legislation has recently come into force to help deal with it.

The Late Payment of Commercial Debts Regulations 2013 came into force on 16th March 2013, bringing the UK in line with European Union legislation.

The regulations affect transactions between commercial entities and therefore apply to recruitment agency agreements with clients.

From now on if no payment terms are stated in the contract, interest will be applied to the debt after 30 days.

If payment terms are stated in the contract, interest will start to accrue after 60 days or from a later date as specified in the contract, unless the later date is obviously unfair, in which case the 60 day rule applies.

The Regulations provide for late payment interest of 8% above base rate to be applied after the relevant date and for reasonable costs of recovery to be claimed from the offending party.

However, relying on this kind of legislation will usually be the last resort, given that most organisations will want to retain the business relationship.

Adrian Marlowe, MD at legal experts, Lawspeed, agrees that prevention is better than a tough legal cure in most cases. He said: “Agencies do not need to rely on legislation to protect against late payment as a well-drafted contract should cover all the necessary points.”


For advice on your contracts with clients and suppliers contact Lawspeed on 01273 236 236 or email