Late payment surcharge
Discussion
We have a few customers who get really inept when it comes to paying their bills. We generally invoice them with 30 days nett payment terms, but now I'm fed up of chasing the same customers repeatedly to get payment. It's only quite small amounts £100 or so, so it's not crippling us cash flow wise, and their cash flow isn't that bad either. In the t&c on the back of the invoice it states that we charge 8% + base rate on late payments. But for the hassle of enforcing that over £100 bill, it nowhere nears covers our labour for repeatedly chasing them to pay.
Is it legal to add a 'late payment surcharge' onto an invoice - let's say £20 or so, along with a note that they may deduct the charge if they pay by a the due date? I'm guessing there would need to be VAT added onto the surcharge as well? Hopefully this will encourage the tight arses to pay on time.
Is it legal to add a 'late payment surcharge' onto an invoice - let's say £20 or so, along with a note that they may deduct the charge if they pay by a the due date? I'm guessing there would need to be VAT added onto the surcharge as well? Hopefully this will encourage the tight arses to pay on time.
I couldn't see the answer to my question in there, but I think I've found it officially, in the Late Payment Directive: https://www.gov.uk/government/uploads/system/uploa...
Under £1000 you can claim £40 late payment compensation on top of the interest. That might be a bit more of an 'incentive' than just interest on a £100 invoice. So I've put it on the invoice, see if it has any effect. Customer in question is an accountant by the way...
Under £1000 you can claim £40 late payment compensation on top of the interest. That might be a bit more of an 'incentive' than just interest on a £100 invoice. So I've put it on the invoice, see if it has any effect. Customer in question is an accountant by the way...
mjb1 said:
No, we won't be going legal over £40. But we also won't be giving them any more tech support or taking on any work from them until it's paid. There's not a lot else we can do is there?
Not really, except maybe put 5% on the bill from now on to make you feel better, or offer a discount for early payment (though he may take the discount anyway).One of my old directors used to put £10 on the bill each time a client was rude to him. The bills were in the thousands so it was never noticed, but it made him feel better
mjb1 said:
No, we won't be going legal over £40. But we also won't be giving them any more tech support or taking on any work from them until it's paid. There's not a lot else we can do is there?
You can, and you'll win. Their only defence will be to show they paid within the terms agreed.And here's the more interesting point; the interest continues to accumulate until the late payment charge is paid on the debt. So regardless of if they say balls to it; and pay the original amount, it still stays owing until the late payment charge and interest is paid.
The Moose said:
The thing to do would be to offer a x% discount for payment within 30 days
I had a statement from one of my suppliers a month or so ago stating I'd get a free bar of chocolate in the post if our invoice (as it always is) was settled on time. It did make me laugh, accounts payable girls must be fatties normally if that kind of bribery works! Still, it was nice to get a big slab of dairy milk sent to us for just doing what we are morally/legally obliged to do I.e. pay on time!
BrabusMog said:
I had a statement from one of my suppliers a month or so ago stating I'd get a free bar of chocolate in the post if our invoice (as it always is) was settled on time. It did make me laugh, accounts payable girls must be fatties normally if that kind of bribery works! Still, it was nice to get a big slab of dairy milk sent to us for just doing what we are morally/legally obliged to do I.e. pay on time!
Most of the girls I know are easily motivated by chocolate. Sounds like a good idea to me...If you're spending a lot of time chasing them for £100 or so, bin them. You seem to indicate that it's only for small amounts.
Then use that time spent chasing them to find clients who do pay on time.
Problem solved.
and your competitors will get a new client who they will then have to chase....
If they do come back, payment first, then service, new terms, etc..
Then use that time spent chasing them to find clients who do pay on time.
Problem solved.
and your competitors will get a new client who they will then have to chase....
If they do come back, payment first, then service, new terms, etc..
Cyberprog said:
mjb1 said:
No, we won't be going legal over £40. But we also won't be giving them any more tech support or taking on any work from them until it's paid. There's not a lot else we can do is there?
You can, and you'll win. Their only defence will be to show they paid within the terms agreed.And here's the more interesting point; the interest continues to accumulate until the late payment charge is paid on the debt. So regardless of if they say balls to it; and pay the original amount, it still stays owing until the late payment charge and interest is paid.
I finally sent hard copy of my correspondence via recorded mail and added my costs pro-rated for the 1/2 hour I'd spent chasing. Payment took a further week and I still haven't had the courtesy of a response but at least I'm no longer out of pocket.
JustinP1 said:
Simpo Two said:
That's a nice idea. Carrot rather than stick, and cheap to do.
And it would create very interesting case law should an inflated incorrect invoice pass through the net and get paid...!See the Bribery Act 2010.
JustinP1 said:
Simpo Two said:
That's a nice idea. Carrot rather than stick, and cheap to do.
And it would create very interesting case law should an inflated incorrect invoice pass through the net and get paid...!See the Bribery Act 2010.
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