COMPANIES in North Yorkshire were today urged to take action against persistent late payers by regional law firm Dickinson Dees.
Jonathan Blair, partner at Dickinson Dees, said it was "unacceptable" for companies to wait months before they were paid.
He called on them to use late payment legislation to force creditors to settle bills.
The advice comes as the firm launched its own debt recovery service for the region.
Mr Blair said: "Part of maintaining any successful business is good cashflow management and the late payment legislation can help with credit management.
"The UK was one of the first countries in the EU to introduce late payment legislation to help promote a culture of prompt payment, but many businesses are still unaware that where commercial debts are paid late, and where no contractual right to interest exists between the parties, a claim can still be made for interest."
Businesses, including charities, are entitled to claim interest for late payments for all commercial business-to-business and public sector transactions.
Mr Blair said: "Payment can be claimed in line with terms and conditions existing between the parties, or where contractual terms do not make provision for interest, then it becomes due under the Late Payment Act after any period of credit agreed between the parties has ended."
In all other instances, the act permits late payment interest to run if the invoice remains unpaid after 30 days following invoice or the provision of goods/services.
He said: "Interest is recoverable at Bank of England base rate plus eight per cent. In addition, you can levy a compensation charge - between £40 and £100.
"You charge interest on the gross amount of the debt, including any element of VAT, but you do not pay VAT on the interest."
"In addition, you can levy a compensation charge - which is £40 where your outstanding debt is up to £999.99; £75 for debts of £1,000 to £9,999.99; and £100 for debts over £10,000."
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