Contractors' Questions: When can I charge interest for late payment?

Contractor's Question: I've not been paid by recruitment agency even though my umbrella company sent them my invoice more than 30 days ago. My contract says that I don't get paid until the agency does. Fine, but can I now send a second bill to the agency for interest owed, under late payment law?

Expert's Answer: I can advise on the Late Payment of Commercial Debts Act 1998 ('the Act') as follows:

1. You are entitled to charge simple interest on a contract to which the Act applies

2. The Act applies to contracts for the sale of goods, or a contract (other than a contract of sale of goods) by which a person does any or any combination of:

i) transferring or agreeing to transfer to another the property in goods;
ii) bailing or agreeing to bail goods to another by way of hire or, in Scotland, hiring or agreeing to hire goods to another
iii) agreeing to carry out a service

3. Consumer credit agreements and contracts intended to operate by way of mortgage, pledge, charge or other security are excluded under the Act.

4. Therefore if your contract falls within points 2.(i)-(iii), then it will be a contract which you are entitled to charge simple interest.

The expert was Paul Bicknell, of Lawdit Solicitors.