Small business should be required by law to charge interest on invoices over 30 days old.

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Small business should be required by law to charge interest on invoices over 30 days old.

Additional Information

Small businesses supplying goods and services to larger clients are frequently asked take on debt on their client's behalf in the form of 60 or even 90 day payment terms.

It should be required in law for all small businesses with a turnover of under £250,000 per annum to charge interest at base rate plus 8% for each day over 30 days that an invoice to another registered company remains unpaid.

Companies would remain free to enter into extended payment term agreements, but the interest on those invoices would be statutory.

As a result, such extended term agreements would be less attractive to the purchaser, and businesses would be able to fund the cost of borrowing required to sustain those arrangements.

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