When is a payment counted as 'paid'

re payment terms - we always say 30 days
- does payment on the 30th day when it won't be credited/cleared in bank account for another 4 days count as 'paid on time'?

Hello

Thanks for submitting your question to the forum. If someone gives you 30 days to pay then that is 30 days within which to ensure there are cleared funds available to the supplier as payment for the good or service that has been received.

Thanks

Hi,

Chris seems to be up to date with current Revenue thinking on this point:
www.contractorfriend.co.uk/contractor-news/view/vat-payments-by-cheque-received-only-when-funds-clear-194

A change brought in recently to drive businesses towards electronic payments.

However for many business transactions payment date will still be date of receipt of the cheque. So once again it boils down to what are the terms agreed by the parties.

E Frankland wrote:

re payment terms - we always say 30 days
- does payment on the 30th day when it won't be credited/cleared in bank account for another 4 days count as 'paid on time'?

As far as our own Credit Control goes we expect cleared funds to be received within 30 days. The cheque arriving on day 30 or bacs being initiated on that day would be classified as late.

At which point your account would be on stop.

But then we may be a little stricter than most ;)

In the revised directive of EC 2000, The European Parliament and Council of the European Union define Late Payment as

14(b) A debtors payment should be regarded as late, for the purposes of entitlement to interest for late payment, where the creditor does not have the sum owed at his disposal on the date provided that he has fulfilled his legal and contractural obligations.

In simple terms a payment is deemed late if the seller does not have cleared funds, an uncleared cheque is therefor technically a late payment.

Note also that it is not simply the invoice date that applies but the date at which the contract has been fulfilled. So if the contract calls for a payment before the the release of goods then the invoice is not late until AFTER the supply of goods even if this is after the date specified on the invoice.