by scowan
15. September 2010 22:43
Unlike previous legislation which differentiated between different types and sizes of organisation all businesses, notwithstanding their size, including public sector bodies, can use the law. So if you are a Scottish business trading with another business, government or local authority you will be able to use the Act and benefit from being able to recover interest as well as reasonable recovery costs.
Are you obliged to use the Act?
The answer is "no" although it is hoped the more often the Act is used the greater businesses will be aware they will have to pay their bills on time leading to a new culture of payment being required within credit periods.
Can You Use An Alternative to the Legislation?
There is no reason why you cannot contractually agree the amount of interest you wish to charge your customers in which case the late payment legislation will not apply.
So, for example, your terms and conditions may stipulate you are entitled to an agreed defined rate in the event of your account being overdue by 21 days following delivery of goods or performance of services.
Note: (1) If you do make your own provisions for contractual interest then the late payment legislation will not apply.
(2) If you do not make any arrangements for interest then the legislation will apply and you can use it.
The Yuill + Kyle website at www.debtscotland.com gives users the option to download free demand letters. These letters provide the option to:
1.Charge no interest;
2.Charge contractual interest or
3.Charge Interest under the legislation.
4.Add collection cost, where appropriate.
These can be found in the ‘DIY Toolbox’ part of the site at http://www.debtscotland.com/recover.cfm