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LATE BUSINESS PAYERS FACE FINES!

Recent research reveals that unpaid bills and late payment of debts continues to be the greatest worry for small firms. Worryingly ¦

10% have to wait 2 months or more after the due date for payment,

40% put up with payment up to 30 days after the deadline,

13% have to postpone asset purchase because of lack of cash,

5% experience problems in obtaining credit.

With an estimated £7Bn in late paid bills at any one time, it is a major contributory factor to small business financial problems and for some their failure.

The final stage of the Late Payment of Commercial Debts (Interest) Act of 1998 came into effect on 7 August 2002 and which extends the scope of existing legislation to all businesses ¦ regardless of size. It provides for compensation by way of interest together with a fixed sum, depending on the size of the debt, which will compensate for the wasted efforts spent chasing unpaid bills ¦ either by the proprietor or his debt collection agency.

Further protection is provided by the ability to challenge grossly unfair terms and conditions and where these undermine the terms of the legislation. The compensation terms are as follows: -

Interest	8% pa above the Bank of England base rate - currently 4% - as at the previous 30 June / 31 December
Compensation for Recovery Costs	In addition to the statutory interest a creditor will be entitled to compensation to a fixed sum as follows:
	Debt	Compensation
	Under £1,000	£40
	£1,000 - £9,999	£70
	£10,000 or more	£100

We never cease to be amazed at the tolerance of proprietors of businesses to late payment, particularly where there has been a history over a period ¦ in many cases a bad debt, not recoverable, emerges and which regrettably, sometimes, forces the supplier company into an insolvent position.

Passing the debt collection process to an accredited debt collector can not only save costs and time, it importantly allows the management to get on with the running of the business. Utilizing the credit support management information available - company reports, credit appraisals, credit limit recommendations etc., it will ensure that only creditworthy businesses form the customer base.

Costs for debt collection vary - we operate on a "no fee, no payment basis" - where a fee becomes appropriate the costs are, in most cases, covered by the compensation provided in the new legislation. Costs for credit management information vary, but not expensive, and should be regarded as a tax deductable insurance to avoid bad debts!

If you or your clients would like more information on the services of P & A Debt Recovery Limited, phone Peter Gladwin or Jim White on 0114 267 1271 or visit www.padebtrecovery.co.uk

Jeremy Priestley is the Managing Director of P & A Debt Recovery Limited

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