Cancellations / Admendments but payment still required - service invoices

We are a service provider who require all invoices to be paid before the service is delivered, this is made clear at the time of booking. We require payment 14 days before the service is delivered.

We have terms for cancellations and amendments that state if the cancellation is made 28 days or more we will give full refund, 15 days - 28 days retain 25% of service fees or 14 days or under - retain 100% of service fees.

The problem is people pay late (even though we chase like crazy) and we don't often have the fees to retain so we need to call them and say that they still owe us the money to be faced with, well your not getting it :( and then we don't know where to go from there.

What i am wanting to do is send a letter when a person cancels basically saying: - our terms state that when you cancel we retain fees and therefore you owe us ££xxx so please pay it to avoid ............

but I don't know what our rights as a company are though and i don't want to put something if i cannot make it stand.

Can someone please advise what our rights are and what we can actually put on the letter and how we can get our money in.

We are owed the money and they receive our t&c's on every invoice and are also given a leaflet with them clearly visible and highlighted so they are aware.

Help Please

Thanks

Hi Janey,

From the situation you have described we aren't sure if you can find a "quick fix" solution to the problems you are facing.

Your credit control process sounds a little confused as you state payment must be made 14 days before booking, but you allow cancellations at no charge up to 28 days in advance?

Couldn't you solve a majority of the problems by taking payment at the point of booking? No payment = no booking so no risk to you from the cancellations?

Just a quick thought :)

I also think we should take full payment at the time of booking but rest of the company is not in agreement. Many of our customers are large businesses who insist on invoice hence the 14 days before payment.

At time of booking we request 25% deposit of total course cost (payable within 7 days) or booking is cancelled. Remaining balance is then due 14 days before.

Bookings are made months in advance hence the deposit requirement.

I think we need to change our terms but I'm not sure what to apart from full payment at time of booking but we are likely to lose business so its not an option and nor is offering credit to customers, we totally self fund so no borrowing, factoring etc. we need payment upfront

Hi Janey,

Let us guess, you work in credit control, but sales are saying no to full payment at the time of booking?

If so we aren't surprised and feel your pain!

The problem here would appear to be that your terms leave you at a disadvantage when a booking is cancelled after the 14 day cut off point (as prior to that you retain the 25% they pay on booking).

Whilst legally we imagine you have a claim (provided your terms are agreed and enforceable) as you say chasing for money, for a service that has not been provided, is an uphill struggle!

Are you actually adding late payment costs and interest to these accounts? If not we would suggest that you do this immediately. Even if the customers only pay the principle sum, you can always write off the charges.

We would say try writing to them immediately after payment is due advising of the addition of costs and interest and reminding them of the original agreement (you may find it useful to include a copy of your agreed terms in this letter, especially if they have been physically signed). Follow this up with regular credit control calls and see if the situation improves.

If not you can always look at getting some outside help, but if you can do it in-house so much the better :)