For businesses of all sizes, maintaining a steady cash flow is crucial for survival and growth. One common challenge that businesses often face is non-payment of invoices by their clients or customers. When invoices go unpaid, it can have a significant impact on a company’s financial stability. Fortunately, the UK legal system provides several mechanisms and remedies to address this issue and protect the rights of businesses. In this blog post, we will explore corporate law actions and legal solutions available to businesses in the UK when dealing with non-payment of invoices.
The Late Payment of Commercial Debts (Interest) Act 1998
The Late Payment of Commercial Debts (Interest) Act 1998 is a key piece of legislation designed to discourage late payments and compensate businesses for the cost and inconvenience of late payment. This Act allows businesses to charge interest on overdue invoices at a specified rate, typically the Bank of England base rate plus 8%. Additionally, businesses can claim reasonable debt recovery costs.
Under the Insolvency Act 1986, businesses can issue statutory demands to debtors who owe them money. This formal legal notice demands payment within 21 days. If the debtor fails to pay or reach an agreement, it can be an indication of insolvency, allowing the creditor to initiate winding-up proceedings against the debtor company.
Small Claims Court
For smaller invoice disputes, the Small Claims Court, part of the County Court system, provides a cost-effective and accessible means of seeking payment. Claims of up to £10,000 can be pursued through this route. The court’s decisions are legally binding and enforceable.
County Court Proceedings
For larger invoice disputes exceeding £10,000, businesses can initiate County Court proceedings. This involves formal legal action and may require legal representation. The court can issue a judgment in favour of the claimant, ordering the debtor to pay the outstanding amount.
Non-payment of invoices: Legal Advice by JMR Solicitors
Non-payment of invoices can be a significant challenge for businesses in the UK. However, UK corporate law provides various actions and legal solutions to address this issue and protect the rights of businesses. The Late Payment of Commercial Debts (Interest) Act 1998, statutory demands, Small Claims Court, and County Court proceedings are powerful tools that businesses can utilize to ensure timely payment of their invoices.
These legal remedies are backed by UK legislations and have been substantiated by real-life case studies. When faced with non-payment of invoices, it is essential for businesses to be aware of their legal options and seek professional legal advice when necessary. JMR Solicitors is here to assist you with any corporate law matters, ensuring that your business’s interests are protected in accordance with UK law. Call us on 0161 491 3933 or email firstname.lastname@example.org