Invoice Error Does not Stop Late Payment Interest

A creditor is able to claim interest from either the agreed date of payment of the debt or alternatively 30 days after the day on which the debtor has received the invoice. But what happens if there is a mistake on the invoice? Does interest still accrue on the outstanding debt? The Court of Appeal has recently decided that it does.

The Court of Appeal has decided that an invoice does not have to be correct before the creditor can start adding interest for late payment of the invoice. It was argued that any error, however small, should be sufficient to prevent the creditor from claiming interest for late payment of an invoice. However, the Court held that the invoice did not need to be perfect before interest could run.

This is a pragmatic decision by the Court which was concerned that if an invoice was required to be ‘perfect’ it would mean that a creditor could expolit the smallest error on an invoice in order to delay payment of the debt and avoid the payment of statutory interest.

This is a welcome decision in the current financial climate where debtors are trying to avoid paying invoices and interest for late payment of them.