Category Archives: Credit Control

Excuses Excuses Excuses!

10 Late Payment Excuses…

 “I can’t afford to pay you until my customer has paid me – This is a tad tricky; can your customer make an acceptable immediate part payment? You need to pin your client down; insist on an immediate part payment and then suggest a review in 2 weeks’ time.

“The cheque is in the post” Oh that old chestnut it keeps cropping up doesn’t it! Explain it has not been received and should it ever arrive you will destroy, then provide your bank account details and ask for an electronic bank transfer.

“I’m not paying I have a dispute” If there is a genuine dispute then its imperative you establish what the dispute is and whether its genuine or bogus.

“I haven’t received your invoice” Scan it in to your computer and e mail it to your customer whilst asking for an electronic payment.

“I sent the invoice back to you it didn’t bear the right purchase order number” Ensure that you get your documentation right first time so as to remove this as an excuse. If you receive purchase orders PLEASE PLEASE PLEASE read the small print. Make sure your invoice bears the correct info and is addressed to the right person/company – if in doubt telephone the customer upon receipt of their order to double check.

No one here to sign a cheque” ask for a BACS payment

The Director/Owner has died” Ok very very occasionally this may have tragically happened and although sad you still need your money! If the firm was a sole owner then the business has ceased, however, it may continue to be run by a relative in effect taking over the reigns. In law you may have a claim against the Estate however, you may wish to consider your position and take legal advice depending upon the size of the debt.

Late Payment Legislation changes

Posted by diane.bantten

LATE PAYMENT LEGISLATION UPDATE

Listen up …. some good news for businesses.  Late Payment legislation has at last been updated as from 16th March 2013.

The Late Payment of Commercial Debts (Interest) Act 1998 has been updated with effect from 16 March.

What has changed?

The Act continues to apply to contracts for the supply of goods or services where the customer is either a business or public authority and still imposes a statutory rate of interest of 8% over Bank of England Base on late payments unless the parties have agreed a ‘substantial remedy’.  However the Act has been amended so as to:

  • impose maximum payment periods;
  • limit the amount of time a purchaser has to verify goods or services; and
  • increase the amount of payment enforcement costs a supplier can recover.

These changes only apply to contracts under which statutory interest is accruing (ie if there is not a ‘substantial remedy’ under the relevant contract).

The maximum payment period

In a contract where the customer is a public authority the parties can agree a date for payment of up to 30 days from the latest of the customer:

  • receiving the goods or services;
  • receiving the supplier’s invoice; or
  • verifying that goods or services conform to the contract.

If the customer is a business, the payment period can be up to 60 days after the latest of the events listed above. The period can also exceed 60 days but only if expressly agreed by the parties and if it is not ‘grossly unfair’ to the supplier.

The maximum verification period

The Act limits the amount of time purchasers have to verify the conformity of goods or services to 30 days, unless the parties expressly agree a longer period and that period is not ‘grossly unfair’ to the supplier.  Longer periods may be appropriate in particularly complex contracts.

Recovery of costs

Suppliers were already able to claim a fixed sum of between £40-£100 (dependent on the size of the debt) under the existing legislation to compensate them for the costs of recovering late payments.  The changes introduce the additional right for a supplier to claim the difference between the reasonable costs it incurs in debt recovery for example when you instruct Acquit Debt Recovery! Any unreasonable attempt to exclude either the fixed sum or top-up costs will fail.

Contract Law and Terms of Business

Posted by diane.bantten

Contract Law – a recent case.

Azimut-Benetti SpA v Healey [2010]

A contract contrained a clause entitling a yacht building company to damages of 20% of the full contract price on the buyer’s default.  The buyer argued that the clause was a penalty clause and thus unenforceable.  The trial judge disagreed finding that the clause was commercially justifiable as providing a balance between the parties upon lawful termination.

This brings me neatly on to terms and conditions of business.  What do you do if you don’t have any?  You could :-

1. Write your own.

2. Download a template from the web.

3. Let your solicitor or lawyer have a go.

4. Copy some terms from a competitor.

5. Let Acquit write your terms.

Whichever option you choose should depend upon why you need business terms and conditions. Do you want some professional-looking text simply to look, well, professional? If so, then all you need to do is choose Option 2 i.e. download a cheap generic set of terms from the web.

If, however, your business will be offering goods or services on credit then you need a set of business terms suited for this purpose. This is because a great set has the ability to:

i) help prevent late payment by your customers or debtors. ii) give you real options in case of late payment or non-payment by your customers.

1. Write your own. If you have some legal training or higher education in commercial and contract law, then you could draft your own terms. But how long would it take you? And how can you be sure that you include everything important, especially from a credit management perspective?

2. Download a template from the web. If you are on a tight budget then this might be an option. But do you know who wrote the original terms and conditions template? Do they work in practice? How will they stand up in court if you need to enforce your rights? Who will create the additional clauses you’ll need for your particular business and industry? How much customisation is possible? And, again, how can you be sure that they include everything important, especially from a credit management perspective.

3. Let your local solicitor or lawyer have a go. Yes, they have the training. But in practice, how many sets of terms do they create for local businesses on a regular basis? One or two a month is usual because many solicitors are also busy focusing upon divorce, conveyancing, probate and litigation work. And the biggest question here is how much will a solicitor charge you for a fully bespoke set of terms and conditions?

4. Copy from a competitor. Whatever you do, don’t be tempted to copy a competitor’s terms and conditions. If you are caught, then there could be financial penalties and even worse, the negative publicity to suffer as a consequence.

Copied terms are rarely sufficient to protect the business fully. This deficiency is usually due to either lack of relevant credit management terms or the absence of clauses which address key legislation such as the Data Protection Act, Sale of Goods Act etc.

5. Ask Acquit Debt Recovery to create your business terms and conditions. We will fully-customise for you a set of terms and conditions that will be right for your business.

It is possible to word your terms so that your business can benefit financially from a free debt collection service and from massive improvements in your cash-flow.

10 Late Payment Excuses …..

Posted by diane.bantten

“I can’t afford to pay you until my customer has paid me” – This is a tad tricky; can your customer make an acceptable immediate part payment? You need to pin your client down; insist on an immediate part payment and then suggest a review in 2 weeks’ time.

“The cheque is in the post” Oh that old chestnut it keeps cropping up doesn’t it! Explain it has not been received and should it ever arrive you will destroy, then provide your bank account details and ask for an electronic bank transfer.

“I’m not paying I have a dispute” If there is a genuine dispute then its imperative you establish what the dispute is and whether its genuine or bogus.

“I haven’t received your invoice” Scan it in to your computer and e mail it to your customer whilst asking for an electronic payment.

“I sent the invoice back to you it didn’t bear the right purchase order number” Ensure that you get your documentation right first time so as to remove this as an excuse. If you receive purchase orders PLEASE PLEASE PLEASE read the small print. Make sure your invoice bears the correct info and is addressed to the right person/company – if in doubt telephone the customer upon receipt of their order to double check.

“No one here to sign a cheque” ask for a BACS payment

“The Director/Owner has died” Ok very very occasionally this may have tragically happened and although sad you still need your money! If the firm was a sole owner then the business has ceased, however, it may continue to be run by a relative in effect taking over the reigns. In law you may have a claim against the Estate however, you may wish to consider your position and take legal advice depending upon the size of the debt.

“You will have to wait until we have paid our suppliers” this is not acceptable. Explain your payment terms and pursue the money tirelessly!

“I am in the process of changing banks” this should be no barrier to dealing with payment, who in business closes one account without another being fully operational!? Ask for a credit card payment or set up a Pay Pal account.

“We have ceased trading / are in liquidation / receivership” Often a red herring to throw you off scent!  You need to work out precisely how and when this has occurred. Is the company in a formal involsncey – you need to find out what firm of Insolvency Practitioner has been appointed and contact them.

If the business has merely ceased trading you need to satisfy yourself that the business has not assets in order to make a commercial decision as to whether or not it would be appropriate to uprsue the debt  via legal channels.

As always, if you would like any help with any of the above problems then give Acquit a call.

Take Control – Cash is King!

Posted by admin

Controlling your cash-flow is of paramount importance; after all, it is the life-blood of your business. Now is an excellent time to review your credit control procedures. If you find you are being paid consistently late, legislation was introduced to try and protect you from this situation. The Late Payment of Commercial Debts (Interest) Act 1998 and was introduced in 2002.

The legal status of the business you are seeking to claim interest from is irrelevant. Late payment interest can be claimed except in the case of personal debt. You can have the best credit control procedures available; however, often the debtor will only pay up when threatened with action.

It pays to seek professional advice at the point of non payment. Contact from a third party such as Acquit will grab your client’s attention. A third party can assist you in maintaining a good relationship with your client who should understand that in these tough times cash is king and we all deserve to be paid on time!

My top tips

Posted by admin

So, is there an element of alchemy? …… Maybe!

  1. Review your current credit control procedures – include your bank details on your invoices and ask for electronic payment it will boost your cash flow.
  2. Do your homework – when supplying new customers obtain a credit report.
  3. Ensure your terms of business are up to date – be proactive and chase early.
  4. Ensure your terms of business are notified to your client at the very beginning of your relationship .
  5. Demand interest and compensation.
  6. Enforce your terms of business, if you are due payment on day 15 ensure that you pick up the telephone and ask for payment, follow that with a formal letter of demand.
  7. Ensure the lines of communication remain open.
  8. Don’t allow your client to fob you off – be firm.
  9. When all else fails give me a call!