Late Payers!

Can anyone offer any advice as to how I charge late payment interest?

Do I simply raise an invoice for each month the invoice is overdue? My ex client is now approaching 31 days overdue, despite reminder letters/emails and calls.

We normally allow for 2 months before proceeding with further action, but its never got to that stage. He does owe quite a bit, so we will be pursuing, but I just wonder if maybe a late payment invoice might put his pen to this cheque book?

Any advice?

Try here:

http://www.payontime.co.uk

They have some good advice on dealing with late payers and adding interest to invoices, etc.

It depends on circumstances...

You mention that it is an 'ex-client', but when they were an 'active client, did they pay on time or have they always been late payers? Are they late paying because of some kind of grievance or 'falling out' with you?

The best way I've found in handling late payments is, in the first instance to be polite but firm - you may already have done that with the reminder letters/emails/calls etc.

If he has not given you a satisfactory reason as to why he is delaying payment, then I don't think it unreasonable to threaten 'further action'.

Like Paula, I have found http://www.payontime.co.uk to be a useful website.

Good Luck

Thanks both.

The client, when a client was 'ok' at paying maybe a week late. He is now almost a month late, which is possibly due to his preferential rate finishing.

He was started on a rate for 6 months, which was well documented in his contract, and after 6 months it was to increase, and to be fair it was a sizeable increase but he did agree to it and we always had good communication.

We issued him with the months notice of the increase of which he cancelled the contract which we allowed.

Now he won't take our calls, doesn't return emails, even had a sales manager go to his office but....he wasn't in, though his car was parked in the car park.

He now has 4 invoices, 2 due payable next week and 2 which are almost a month overdue already.

I know its only a month, but you just get that feeling when you know it won't be easy don't you.

Have started looking up the site that has been recommended.

Hi Brian

Is the client a sizeable company? I have had a similar situation and this went on for 4 months. I very nearly instructed a debt company to go and bash some doors down, but fortunately what worked for me, is a constant stream of calls to the MD / FD which eventually made them pay up, so I would go away because frankly they have better things to do. By the way, neither would take my calls, like you mention, but the message still gets through, especially if they are refusing to talk to you, they know why.

Keep up wih the calls etc. Persistence does pay off.

Brian, All sounds a little dubious. PM me the company details and I'll send you a current credit report including current payment information (if available). This may throw some light on why they have gone from a good to poor payer!

I'd also recommend dropping Geoff Davies of GRD Credit Control (4N member) a note. http://www.4networking.biz/members/view.htm?UserID=30727 I have made him aware of your post.

He'll no doubt be able to offer good advice or maybe even help. Lots of 4N people have benefitted from Geoffs advice and services.

Kev

Thanks Kevin/Jane,

Though am not sure of their financial position, obviously dealing a lot with their calls, they certainly have the work pouring in, I may be making a mountain out of a molehill as it is only just less than a month overdue, but I think organisation has a large part to play in their business.

Kevin, purely for my own curiosity, I will forward you their details.

Thanks

Geoff Davis, Geoff Davis Geoff Davis.. that's all I'm saying.. :)

Thanks Kevin and Liz - I love you too!

Brian - I will give you a call this morning to make sure you have got this sorted

The advantage of providing training courses is that they have to pay up front or nothing happens. However, I recently did some consultancy work and then submitted my invoice - and guess what happened next? That's right - nothing.

I took advice from Liz Sparkes (who's working with me on another project) and contacted Geoff Davis of GRD Credit Control - and eventually the client paid up (which was quite a relief).

Moral of the story: speak to Geoff Davis.

Hi

I am not sure but do your Ts & Cs need to include provision for charging interest?

If there is no provision then you might be in trouble?

As I understand it you nedd your terms acknowledged by the client before the order.

Good luck

Chris

This is a pretty classic bit of customer behaviour. You offer them a low cost (or no cost) trial and then as soon as the proper economic rate cuts in, they cancel. And because they have already had the service and have no intention of renewing, for some reason they feel under no obligation to pay. My guess is that you will get paid but only after you apply some pressure. You can do this by employing a debt collection service or an outsourced web based product (PM me if you want more details). Most larger companies avoid this by setting the payment up on Direct Debit so that when the step up point comes, the customer doesn't notice. Unfortunately for most small suppliers this is harder to do, but not impossible.

Thanks for the call Geoff, and for everyones comments.

First thing would be, after looking at the link I was sent for payontime, is this applicable to Scottish Legislation, as I believe we work under a slightly different system than down south.

We are thankfully in a position that this money which is outstanding won't kill the business, but nonetheless, its just bad manners if nothing else (which reminds me BT need paid)

Once his final two fall overdue next week, we will be employing some help I think, for principal if nothing else.

As for the interest T&Cs

Part of the license agreement he signed contained the clause that all late invoices will be charged interest, and it is also documented on the invoice itself in big black bold letters.

As a lot of our buisness is now happening online, and pro forma, its not necessary, but our website T&Cs are being updated to include this, which may also cause some problems, because who actually reads the T&Cs of a website - is that just me?

Just to come back on this point the answer is no! For B2B transactions there is a statutory right to late payment fees and interest as detailed in the link given above. It does not need to be specified in Terms and Conditions (although good business practice would probably suggest it should!)

I started this a wee while back, but just a wee update, unfortunately we had to enlist the help of a solicitor who issued a 'pre sue' letter, within a day of the letter being issued we received a cheque made payable for the full outstanding balance.

For £3.70 it was well worth it, and could have been much more uglier.

Thanks for all the help and advice :-)