31/05/2002

Measures to curb late payment of commercial debt

Enterprise Minister, Sir Reg Empey, has welcomed the introduction of a new package of measures to help combat late payment of bills, announced by the DTI’s Small Business Minister, Nigel Griffiths.

For the first time, firms owed money will be able to claim up to £100 in debt recovery costs for each overdue bill, on top of claiming interest on the amount owed.

Sir Reg said: "My Department and the DTI have worked together to introduce late payment legislation which will come into force in Northern Ireland on 7 August 2002. The legislation will fulfil the UK’s obligations on combating late payment in commercial transactions by using a European Directive to give positive benefits to Northern Ireland businesses."

The legislation will operate in three key ways: simplifying the calculation of the interest rate for late payment by fixing the rate for a six-month period; allowing representative bodies to challenge in court grossly unfair contractual terms on behalf of small businesses; and extending the late payment legislation to include businesses of all sizes and the public sector.

The Minister said: "This legislation will help small business by reducing cash flow problems arising from customers who fail to pay on time. Businesses involved in cross border transactions with the EU will also have greater payment certainty as a result of having access to legislation similar to that available in the UK."

In July 1997, the European Commission published a report on late payments in commercial transactions. The report suggested that heavy administrative and financial burdens are placed on business, particularly small and medium-sized enterprises (SMEs) as a result of excessive payment periods and late payment. It cited late payment as a major cause of insolvencies, threatening the survival of businesses and resulting in numerous job losses.

A new guide ‘A User’s Guide to Late Payment Legislation’ is available by telephoning 0870 150 2500 or visit www.payontime.co.uk to download the guide from the Better Payment Practice Group website.

(SP)

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