Your contract may specify a credit period and how interest will be charged on overdue payments. In addition, commercial debts are covered by the Late Payment of Commercial Debts (Interest) Act 1998. Where there are no written terms of credit, this allows interest to be charged at a set rate which is the Bank of England base rate plus 8% from the end of a notional 30 day credit period. In practice, however, few firms ask for payment of interest (or debt recovery costs) under the legislation unless the dispute has reached the courts. If you do intend to charge interest and collection costs on overdue debts, your best course is to make this clear, in writing – in your terms and conditions, quotations, acknowledgments, invoices and so on.