Please note – Statutory Late Fees, as calculated by Satago by default, only apply to debts within the European Union. If you mark a customer as non-UK, Late Fees will not be applied to that row and you are required to set a custom late payment fee here.
Also – Satago is unable to accurately calculate Late Fees for part-paid invoices. If this is the case you will see an asterix against the Late Fees calculation.
Statutory Late Payment Fees
Under the terms of the legislation, you can charge your customers 8% interest above base rate, on a daily basis. As of 8th January 2016, the base rate is 0.5%, therefore you can charge annual interest of 8.5%, or 0.0233% (annual interest divided by 365) per day. In addition, you can charge compensation which is fixed, depending on the size of the invoice: £40 for a debt less than £1000; £70 for a debt between £1000 and £10,000; and, £100 for a debt of £10,000 or more.
Go to Accounts – Invoices. If you hover over the calculated late fee in the Late Fees column, you will see a breakdown of the late fee calculation.
Whilst a debt is outstanding, the calculator will recalculate how much you are owed every day and the total late fee will accrue. Make sure to regularly update your data so that we know when a debt has been paid, and Satago can calculate how much you are finally owed.
For the purposes of the Late Fees calculation, Satago will always assume that any invoice older than 60 days is late from the 61st day onwards, even if the agreed terms are longer. This is because the Late Payment legislation actually specifies this – you can charge the late fees, even if you “agreed” longer terms, unless the customer can prove that the terms are “grossly unfair” to the supplier. In these cases you will see the word “overdue” is in quotation marks, since you may not really consider the invoice “overdue”. This is the number of days that have been used for the late fee calculation. Note your actual agreed terms are still used within Satago to determine whether an invoice is late or not.
Note also that the legislation specifies that in the absence of agreed payment terms, the default is 30 days.
You can actually retrospectively claim up to 6 years worth of late payment fees under the Limitations Act. However, please note that on first import to Satago, the system will only import 1 year of data. Therefore, we do not hold details of all the late fees you maybe be able to claim. If you would like us to make this possible, please get in touch.
Since we are not lawyers, we recommend that you consult your own solicitor before charging late-payment fees.