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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3774
Experience:  Solicitors 2 years plus PQE
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If my terms and conditions on the invoice specify interest

Customer Question

If my terms and conditions on the invoice specify interest at 0.1% per day is that an excessive rate in law?
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you for your question and welcome.

My name is AJ and I will assist you.

Lets say you are owed £100 and you charge interest on that at 0.1% per day. That works out at 10p per day or £36.50 per yer.

If you charge statutory interest on £100 which 8% per annum that works out at £8 per year or 2.19p per day.

On that basis your daily rate does seem slightly excessive, however it wont be excessive if you can justify it as the cost of recovery.

I would consider reducing it to a figure that is either a reference your banks base rate so for example 10% above base rate of Bank X per annum and say that interest accrues daily or at a monthly rate. This would be fairly standard in commercial terms and conditions. I have seem companies that have successfully enforced 2% per month accruing daily on the basis that they are not banks or credit facilities and therefore interest on late payment represents the cost to their business. In my experience that is the highest rate I have seem enforced.

Kind regards

AJ