As a supplier making sure you get your Terms and Conditions of trade right is a vital part of your business negotiation. It can save time, cost and aggravation further down the line.

This free guide from Lovetts Solicitors outlines steps that can be taken to update a set of standard terms and conditions so that the suppliers can effectively recover not only the outstanding debt but also any additional expenses incurred during the recovery process.


The main points are as follows:

Be aware of the “fixed costs regime” – under this some costs are automatically recoverable.

Under the Late Payment of Commercial Debts (Interest) Act 1998 creditors can claim interest up to 8%. Think about this when wording your contract. Some customers may try and get this down, if they do you should ask yourself why and make a judgement call based on your existing relationship with them.

Compensation for unpaid invoices can be claimed on a sliding scale based on the size of the invoice. The amounts aren’t huge but they signify intent.

You don’t need to start legal proceedings to claim interest and compensation on late invoices, indeed it might be better that you do attempt to claim interest first as it will demonstrate to the court that you have attempted to deal with the matter yourself before commencing legal proceedings.

The guide gives you actual sample text which you can amend and insert into your contract although it should be noted that you might want to take advice on this first either from your own solicitor or from Lovetts.

ALWAYS keep a record of costs you incur when recovering debts. You’ll find it hard to recover any compensation, regardless of whether or not you have agreed terms, if you do not have any proof of what those costs have been.

Always make sure you include and reference your terms and conditions are part of your contract / agreement. Make sure you do this in advance of supplying goods or services.

Remember that if you do end up in court costs are awarded at the court’s discretion. As such there is no guarantee.

This guide will help you recover other costs however the definition of what they are is subjective and should you end up in court they too will be determined at the discretion of the court.


TLPD’s advice is to update your terms and conditions accordingly and seek advice from a solicitor in doing so. By doing this and calling it out to your customer you signal professionalism and intent.

However, most businesses are understandably wary of court proceedings due to cost and the uncertainty of recovering them so we also advise that you find out more about your customer and whether they are likely to be late payers. Prevention being better than cure.