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Late Payment Terms

7 years 9 months ago #1136 by Gilkicker
Late Payment Terms was created by Gilkicker
Hi I am new to this site, so may be the basis of my question has been raised in the past.

I have a customer who is refusing to even reply to communications. Yet I know through the grape vine he is getting my invoices.

I understand the concept of the late interest charges etc, but my question is :-

All my invoices clearly state the following:-

"An Administration Fee of £25 + an interest charge of 5% will be added to any outstanding invoice not paid within 10 days of an invoice due date. Amounts to be calculated and charged on a monthly basis, or part thereof, and added to the amount outstanding, to be invoiced monthly"

Terms, Again Clearly stated on the invoice, are. "Net 15"

This customer has paid invoices on these terms before, and in the interest of not engaging in further work with him, I have not enforced the terms. It is now a different situation. The oldest invoice is now some 24 months late and we are talking around £6000 prior to interest being added

I have sent invoices through the First Class Post, Recorded Delivery, Hand delivered, (Photographic evidence that they were posted through his letter Box). I have even sent copies to his Wife's Business address. With a request she passes them on. I know he can afford to pay, especially when he entertains other customer on extravagant shooting days. All to no avail.

Am I correct in assuming that the above statement on my invoices constitute a contract and there for is legal. Or does the UK legal system not work for me. I need to get the understanding right before I go wasting time and money through the small claims court, because, I may not be correct in my understandings that what I clearly state on my invoice forms a contract.

Many thanks for any help offered. Kind regards. Peter

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7 years 9 months ago #1137 by john@termsandconditions.co.uk
Hi there Peter,

Was sorry to learn of the problems you have encountered whilst trying to recover money from your debtor.

Mentioning your payment terms on your invoice (or any other terms) can provide the seller with a useful opportunity to remind her customer of key contract terms and conditions which, of-course, underpin the business relationship. For this reason, we recommend that terms and conditions are included on the reverse of more or less everything i.e. credit account applications, statements, invoices, estimates, request to supply forms and so on. However, if the invoice is your only means of communicating your terms to your customers then such terms are unenforceable. This is because a contract is formed BEFORE work starts or BEFORE good are sold.

So if you do not have a contract terms and conditions (ideally written) in place before you started work for your debtor, then both parties are bound by statue law. The statute law on late payment interest and charges is covered in depth on this site.

Best Regards
John Hackwood
TermsandConditions.co.uk Ltd

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6 years 6 months ago #1825 by paolla
Replied by paolla on topic Re: Late Payment Terms
I'm new here and completely confused :) I don't want to create new topic, since I have a question regarding Late Payment Terms, so I think best way is to ask here, hopefully somebody will be able to help me.

I'm a freelance designer. Recently I was browsing through different forums, websites to find more information about Late Payments and fee I can charge my clients if they delay payment.
I got confused ( I don't know what exactly should I write on my contract - to make it clear to my clients and I guess myself too :D )

One forum for freelancers, somebody wrote they write on their contract:
"Invoice to be paid within 14 days. Interest accrued; 5% of outstanding amount to be added every 7 days, starting from 15th day of finished project".
another person replied, that it is not correct way, but did not explain further :(

My question is:
What is the correct way to charge client on late payment, what exactly should I write?
e.g Got a project (total: £500 ) client within 14 days did not pay... how and what interest I can charge client on late payment?

and 2nd question:
I saw that I can charge up to 8% ?? how does it work if a client pays in USD Currency (through paypal) do I need to convert to GBP and charge 8% . Oh my I'm such a newbie, apology!

Hopefully this forum can help me out with a great simple breakdown how does it work :)

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5 years 7 months ago #1911 by james@cpa.co.uk
Hi Paolla,

People can put in their contracts special interest rates and ways of calculating of them. They can also set when payment is due, so long as they are reasonable.

In the absence of special terms though, it is usually assumed payment is due in 30 days.

Then interest is calculated at the statutory rate as follows:-

1) Work out the yearly interest: take the amount you’re claiming and multiply it by 0.085 (ie 85%).

2) Work out the daily interest: divide your yearly interest from step 1 by 365 (the number of days in a year).

3) Work out the total amount of interest: multiply the daily interest from step 2 by the number of days the debt has been overdue.

If you need any assistance collecting from late payers, let me know.


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