08 July 2004
Suppliers have a better chance of being paid on time if they threaten to charge interest on overdue payments, a new report claims.
Research by the Credit Management Research Centre (CMRC) revealed that companies were using late payment legislation to collect money owed and warning clients that interest would be charged if they failed to pay promptly.
Professor Nick Wilson at the CMRC said: "Late payment is still an issue in this country. UK businesses are owed £24 billion in outstanding invoices. But legislation alone cannot be expected to improve the situation."
The report, Credit Strategy and Corporate Performance, showed 36 per cent of businesses admitted the threat of paying interest would make them pay promptly.
It found that 80 per cent of firms are aware of the late payment laws and 38 per cent warn their customers they will charge interest on outstanding invoices.