Key Change in the recovery of Late Payment Compensation

Image: Amanda Marie/gdtography/Unsplash
Image: Amanda Marie/gdtography/Unsplash

In order to comply with the terms of an EU directive aimed at achieving consistency across the EU in combating the late payment of commercial transactions, the Late Payment of Commercial Debts Regulations 2013 (“the Regulations”) were brought into force by the Government on 13 March 2013. The regulations will make amendments to the existing Late Payment of Commercial Debts (Interest) Act 1998 (“the Act”).

The main changes which will be ushered in by the Regulations concern payment periods and the amount of compensation which can be recovered by a creditor when a commercial debt is not paid on time. The changes to payment periods, which set an upper limit of 30 days when dealing with a public authority and 60 days when dealing with a private sector business are likely to have little practical effect, since the majority of businesses contract on terms well within these limits already.

More significant is the change to the amount of debt recovery costs which a creditor is able to recover from a late payer. Under the old regime, a creditor could recover only a fixed amount of compensation, determined by the size of the unpaid debt, with a maximum of £100.00 per debt/invoice being recoverable for larger debts. Section 3 of the Regulations amend the Act to insert the following:-

“If the reasonable costs of the supplier in recovering the debt are not met by the fixed sum, the supplier shall also be entitled to a sum equivalent to the difference between the fixed sum and those costs.”

This now gives creditors who may not have costs clauses in their terms and conditions, the ability to recover legal costs prior to the issue of proceedings.

All in all, this amendment is certainly a positive one for creditors. It provides a statutory basis for the recovery of an amount which genuinely reflects the costs incurred in recovering a debt prior to legal proceedings being issued, rather than leaving creditors to rely on the rigid scale of fixed fees which were often inadequate, particularly in the case of large debts.

Greenhalgh Kerr
Olympic House, Beecham Court,
Smithy Brook Rd,
Wigan WN3 6PR

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+44 (0)333 200 5200

We are confident in our work and we know that recoveries is a key part of a lender or creditor’s business

We are confident in our work and we know that recoveries is a key part of a lender or creditor’s business. We have designed our pilot projects to give lenders and creditors the comfort and confidence in our service before formally and fully switching recoveries providers. This time also allows new clients to benchmark our service levers and results against existing providers and others.

How it works


You choose 10 recoveries cases

You choose 10 recoveries cases to get us started. We’ll deliver our usual onboarding protocol where we’ll get to know you and your systems, culture, methods, preferences, and requirements.


We get started

We assess each case by setting a strategy then grading and reporting on the case in terms of prospects and timescales and cost. We make immediate contact with debtors, and pursue a recovery in our tried and tested ways.


We review

We deliver ongoing, structured, tailored reports as per your needs and carry out a full 3-month review on these 20 cases. There we’ll discuss how we have worked together, patterns we have seen in your borrowers, your systems, your documents, your pre-legal conduct, outcomes, highs and lows, legal costs (and costs borne by debtors), and possible improvements in all of these.


No strings

We carry on working in this way until all cases have been concluded. You are then free to carry on your discussions with us or to use the experience and market intelligence gained by working with us in the future.

Lenders and creditors have nothing to lose, and everything to gain, by engaging with us on a pilot project.