This Final Payment Reminder Letter (Including Commercial Debts Act Interest) follows up the First Payment Reminder Letter (CDA). It requests payment by return or a written proposal to clear the debt. In the event of either of these two options not occurring the letter informs the debtor that the company may be obliged to take legal action.
This letter refers to the Late Payment of Commercial Debts (Interest) Act 1998 and provides the basis for the calculation of that interest. Statutory interest is charged at 8% above the base rate set by the Bank of England. Please note that the CDA applies only where both the supplier and the customer are acting in the course of a business. It does not apply to “business to consumer” contracts.
Up to date and coordinated records are essential to effective debt collection. An audit trail of credit related documents will facilitate prompt payment as well as establishing the indebtedness in the event of late or disputed payments and any subsequent legal action.
A number of template agreements are available to document a proposal to settle the debt, and, failing any agreed proposal, a “letter of claim” can be sent to the debtor at the end of the grace period mentioned in this letter.