Late Payments: who should be responsible for the interest?

As covered in previous Bulletins, one of the Bill’s key measures would make applying interest to late payments a legal requirement for out-of-pocket suppliers (rather than something they can choose whether or not to do).

While supportive of mandatory interest, our partner BPIF has previously raised with Government that this could create extra admin, requiring businesses to calculate interest, add it to overdue invoices and potentially pursue customers for the additional payment (including for small values).

During the Lords debates, Lord Holmes of Richmond proposed a different approach: instead requiring customers to calculate and pay the statutory interest. That would put the administrative responsibility on the business making the late payment, rather than the supplier waiting to be paid.

The Government rejected the amendment, but the question could come up again during the Bill’s Commons stages.

We want to hear from members

• Would putting the responsibility on the customer reduce the administrative burden on your business?
• If so, what would be a practical deadline for customers to pay the interest?