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Small business owners in England, Wales and Northern Ireland will be interested to hear that following a recent appeal, firms are now automatically entitled to claim fixed compensation on every late invoice.
 
An owner of a Northern Ireland-based company, which supplies staff uniforms to care homes, has been launching claims against late-paying customers since 2007.
 
James Morley, owner of Blue Autumn, has secured more than £40,000 in court victories and settlements from a number of businesses and insisted he "refuses to take late payment lying down" from customers.
 
Mr Morley uses the little-known Late Payment of Commercial Debts (Interest) Act 1998 in a bid to challenge his clients. The Act enables suppliers to charge interest of 8.5 per cent on late payments, and compensation of £40, £70 or £100 depending on the size of the invoice in question.
 
A recent appeal court victory against one of Blue Autumn's customers means firms can secure fixed compensation on every single late invoice; however a court still has the power to reduce or cancel the interest element of the charge.
 
Robert-Jan Temmink, of Quadrant Chambers, Mr Morley’s barrister, said: "The significance [of the ruling] can’t be overstated. For so long, small businesses have been taken advantage of by large businesses ignoring payment terms.
 
"This allows you to say, 'we're not having that anymore'. Businesses ought to be alive [to the legislation]."
 
According to payments firm Bacs, outstanding bills to businesses stand at more than £30bn, with the biggest companies typically the worst offenders.
 
Mr Morley’s own personal crusade has hit him hard in the pocket with £25,000 in legal fees, as well as seeing his firm’s turnover decline from £500,000 to just £150,000.
 
"I'm either brave or crazy. I probably won’t have a business at the end of this. But I’m helping the next guy who will hopefully get his bills paid on time," he added.

Date published 21 Jun 2013 | Last updated 21 Jun 2013

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