Debt recovery costs

I regularly collect £40.00 compensation charge on each overdue monthly invoice. Each invoice is for £35.00.


Philip

HI Beverley

In the absence of mutually agreed alternative terms, they can only apply interest after the default period stated in the Act which is 30 days. So you have good grounds not to pay this interst it seems.

Chris

Firstly, it is not £40 per invoice, it is £40 per sales order. An order may have more than 1 invoice.

You might not claim just one £40, but you might claim £40 against against all the invoices/sales orders paid late over the last 6 years, even if these invoices have been paid.

Do the maths !

But still this law is untested, and until it is tested in the highcourt, it is right to say it is a waste of time.

Again, when will a case be taken to courts to settle and prove the matters. Anybody/ small business got around £30K spare to pay and maybe more if costs are awarded against you for bringing such a stupid case to try and prove the law.

Who is going to pay the legals for a test case ???

Until then, any businesses trying to impose late payments are wasting their time. It doesnt work ! Forget it until it is tested !

A small claims is still not good enough, it needs to be settled in the high court.

I sat in a court room last year on this subject ( Small claims ). The judge stated that he was surprised that since the legalisation came into force, 1998, he had not one case on the subject of late payment. 12 years, one court house, and zero cases.

There well may be businesses out there using the legalisation, but it still remains the fact, what do you do when the customer ignores your late payment demands ? Forget about or go to court and what will happen when you go to court to try and enforce your demand?

1. Who's terms apply.
2. If the customer always paid late - is this accepted as normal practice ?
3. If the customer says his terms are payment in 60 days, you the supplier have 30 days on your invoices - who's terms ?
4. Customer lost their invoices and just waited until you chased them - who's fault theirs or the supplier ?
5. The judge might say that the supplier is out of order for claiming late payment and in the interest of justice he kicks out your claim, and orders you to pay the costs of the other party. What now ?

The legalisation CANNOT be enforced. The law should be scrapped or a test case taken to the high court tO settle the grey areas. Until then businesses using the legalisation should BEWARE ! as they might end up with wasting their time and paying costs !

IF THIS IS ENFORCABLE, CAN WE HEAR OF SOME ACTUAL COURT RULINGS ?

Dear James

The Forum of Private Business was one of the champions of the legislation and have used it to good effect in getting small businesses compensated for what they have been owed. You only have to look at the millions that were repaid to the farming community for the cleanup following the foot and mouth crisis.

www.fpb.org/news/1229/Yb1-YKc.html

The legislation was never designed to be a tool used in isolation. Used as part of a very sound end to end credit management process it is useful.

Best wishes




Chris