Tag Archives: credit control

Why you should claim Late Payment Interest and Compensation

According to research conducted by BACS in 2015, “over three quarters of UK businesses suffer from late and non-payment of invoices. The payment giant, which processes millions of electronic business payments every day, found that an astonishing 76% of businesses are being affected by late payments of up to 6 months beyond agreed contract terms.

BACS also revealed that in companies that are suffering from late and non-payment:

  • 20% of directors have been forced in to taking a pay cut
  • 26% have had to increase bank overdraft use
  • 23% have no choice but to pay their own suppliers late”

* Source http://www.debtadvocate.co.uk/the-effect-of-late-payment-on-business/

The effects of late payment can be extremely detrimental to the  economic health of a business and its owners.

The Late Payment of Commercial Debts (Interest) Act 1998 was introduced to compensate creditors for the late payment of debt and to deter late payment. It only applies to the commercial supply of goods and services where you don’t have a provision for interest in your Terms of Business.

In brief, it enables you to claim interest and compensation for invoices that are not paid on time.

You can claim Late Payment Interest and Compensation if:

  • You have supplied goods and services
  • Your buyer bought for business purposes
  • The contract is not governed by a consumer credit agreement

You don’t have to tell your customers that you will claim Late Payment interest or compensation if they fail to pay on time before they have actually breached your payment terms. However, it may be beneficial for your cash flow to tell them in advance of your intentions, should payment be made late. You could put warnings to this effect on your invoices; your statements and in your terms of business.

Full details of how much you can claim can be found on our website: http://www.acquit.org.uk/claiming_late_payment_interest_and_compensation

 

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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.

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!