Nursery World - Childcare Counsel

What providers should look for in contracts about late payments. By Andrew Manners, director at Morgan LaRoche

While local authorities will be expected to follow the DfE’s model agreement, the actual payment terms and timings will be subject to the particular terms of the contract with a particular provider. Any remedy a provider may have for late payments and any consequential losses will depend on these terms.

Regarding interest, the Late Payment of Commercial Debts Interest Act 1998 implies liability for interest in business-to-business contracts amounting to 8 per cent above the Bank of England base rate and an additional fixed sum dependent on the amount of the debt. The payment is deemed late the day after an agreed date for payment or, where there is no agreed payment date, 30 days after either the customer gets the invoice or the delivery of goods or provision of the service (for public authorities). In practice, public authorities normally try to exclude this Act in their contracts – but these must provide for an alternative ‘substantial contractual remedy’ to late payment.

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