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7 day payment terms and getting tough with late payers

  • lily98
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1 year 5 months ago - 1 year 5 months ago #3122 by lily98
Hi, my partner and I run a small business and are invoices are constantly being paid late. Our terms are 7 days as stated in our T's & C's. We are looking at tightening up our invoicing procedure but want to be sure what we doing things lawfully. We are going to give notice to our regular clients about the changes:

1. Non payment of invoice on day 8 will result in a £50 fee (regardless of
the invoice amount - our invoices average £500)
2. Non payment after 30 days will result in additional fees and interest in
line with UK legislation.
3. We are looking at introducing a terms of engagement document which will
be sent to the client upon instruction. This can be completed and signed
online via a 3rd party company (e-sign or signable) By signing this
document the client is agreeing to our terms. If they do not sign then
our theory is that they are not the type of people we want to do
business with. GULP!

Does this sound ok, specifically the £50 fee?
Has anyone used e-sign for this kind of thing? Feedback appreciated.
Thanks.

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1 year 5 months ago #3137 by j.salmon@cpa.co.uk
Replied by j.salmon@cpa.co.uk on topic Re: 7 day payment terms and getting tough with late payers
Hi,

I've just seen your message this morning.

Under UK late payment legislation you are entitled to £40, £70 or £100 in compensation (depending on the debt) plus interest as soon as the invoice is late (day 8).

If you tell people that you will apply the legislation in your document, then that will be fine.

You could add an additional charge of £50 however you may find that this could be challenged and it would also invalidate the legislative charges of compensation and interest.

Our advice is always to stick to the legislation.

it is fair, proportionate and harder to challenge legally.

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