Account customers - charging interest

[Solitaire Events Ltd]

I have a new-ish client who has decided that they pay on 60 days account. I didn't actually agree to this and have made a bit of a fuss, but they still pay after 60 days.

It is a big company who own multiple venues and as I said, they are fairly new to me. I don't want to rock the boat too much as they have given me some well paid Christmas functions and others during the year, but I am slightly miffed about the situation as I put 14 days on my invoices, thinking they'd pay within 30 days, but to no avail.

I have read up about this and found that the law is on my side but does this actually make any difference?

I found this information:

As part of its package of measures to combat late payment, the Government introduced the Late Payment of Commercial Debts (Interest) Act 1998, which gave small firms with 50 or less employees a statutory right to interest for the late payment of commercial debts. This statutory right to interest and other new entitlements are available to all businesses and public sector bodies from 7 August 2002.

To avoid late payment, there are several things you can do in advance:

1. Clearly print your terms and conditions for payment on any contracts (or order confirmations) signed with an end-client. These terms should clearly state the payment period for any invoice - quite often you would expect payment within 30 days, but this could be shorter or longer depending on your type of business.

2. You could offer an early payment discount, or a discount for upfront payment of several installments. For example, you could charge £500 + VAT for a service/product if the amount is settled within your agreed payment period, and £475 + VAT if payment is made within 10 days. This is likely to encourage many clients to pay early, although you will of course make less money on each deal.

3. If a client has not paid on time, it is essential to follow up on the invoice. Always try to obtain a point of contact in the accounts department since this will save time. Politely ask for the payment to be made and if the problem persists, you can consider charging interest on the overdue amount, or in the worst case, threaten the late payer with legal action.

4. The Late Payment of Commercial Debts (Interest) Act 1998 allows small businesses to claim interest on overdue payments from other companies. Originally drawn up to help small businesses claim against larger businesses, the law now extends this rule to claim against other small businesses. Even if you did not state a payment period in the initial agreement with a client, the Act states that a payment becomes 'late' after 30 days. You are entitled to claim interest at 8% above the prevailing Bank of England base rate. It is worth quoting the Act on any invoices sent to clients.

5. Clearly many small businesses feel vulnerable in demanding payment from larger companies, this is very understandable. For this reason, it is essential to follow the initial steps mentioned above when doing business with clients. If late payment occurs, always try to politely obtain settlement for overdue invoices before taking further action.

Anyone ever done any of this or tried to charge a non paying client interest? (I'm not talking about a private customer)

[Shakermaker Promotions]

Darren, you know the score mate. It doesn't matter what you say, what position you are in legally etc etc...they will hold all the cards and it will be either their terms or off you go!

It doesn't matter whether it's a high end company or some little independent, at the end of the day, it's up to them when they pay. It's annoying I know and I have had the same problem but again...at the end of the day, they can easily find a Disco supplier that WILL adhere to their payment terms.

[Creature]

you could speak to your rep and speak to him of the issue - maybe say your happy at 30 days but at 60 days you may have to charge interest. on the balance outstanding.

but then again you may loose the account - I think possibly that Shakermaker is right - complain too much and you may loose the account

[Charlie Brown]

Darren, you know the score mate. It doesn't matter what you say, what position you are in legally etc etc...they will hold all the cards and it will be either their terms or off you go!

[CRAZY K]

I have a new-ish client who has decided that they pay on 60 days account. I didn't actually agree to this and have made a bit of a fuss, but they still pay after 60 days.

It is a big company who own multiple venues and as I said, they are fairly new to me. I don't want to rock the boat too much as they have given me some well paid Christmas functions and others during the year, but I am slightly miffed about the situation as I put 14 days on my invoices, thinking they'd pay within 30 days, but to no avail.

I have read up about this and found that the law is on my side but does this actually make any difference?

I found this information:



Anyone ever done any of this or tried to charge a non paying client interest? (I'm not talking about a private customer)

Isnt this the problem all businesses supplying large Corporates have?

I dont think fairness, resonableness or the Law have anything to do with this.

If you rock the boat you know whats going to happen obviously UNLESS they cant survive without your service.

Look at people like Marks and Spencer=they tell their suppliers its now x months payment and the underlying message is clear---if you dont accept it we will go elsewhere.

Im afraid its likely to be take it or leave it--unless you can talk nicely to the person who set all this up with you and persuade them that they are breaching the original agreement--

Of course you could increase your prices to compensate for payment delays--

Incidentally my biggest worry would be--will these people go bust owing you thousands of pounds you will never recover--and you would be liable to pay your DJs anyway

Which is why my wifes recent job for 6 Taybarns Restaurants was on the basis of payment 7 days in advance--she cant afford to pay all the performers and then get about by their Accounts Department and maybe never paid.

[Solitaire Events Ltd]

Incidentally my biggest worry would be--will these people go bust owing you thousands of pounds you will never recover--and you would be liable to pay your DJs anyway

That's the chance I have to take Alan and yes, it has occured to me on several million occasions. We are recommended by quite a few venues and if one of the bigger ones went bust then I would be in trouble.

In fact, a few years ago this did happen, with the Hotel going into administration and owing me over a grand. Nothing I could do about it as they sold it as a going concern and I was a preferred creditor. This was a Hotel where I had obtained purchase order numbers 2 months in advance of the booking dates and even taken 50% deposits, so it wasn't like I wasn't being careful! Not a great deal more I could do on that score really.

After that experience I am very hot on this kind of thing and don't generally entertain anything over 30 days, but this got under my radar.

[deltic]

once you get going with them darren and are doing regular gigs you should have a payment comming in from them monthly,just the initial 60 day period while the ball is rolling if that makes sense

[[email protected]]

We work with a few venues that pay on 60 days, there's one in particular that take the view that they'll pay on 60 days or at least they'll start to look at the invoice on the 60 day mark, it took us 5 months of chasing to get an invoice paid from end of january.

They have had press for being very late payers (so much so, that some builders dumped rubble etc on their driveway blocking the entrance to the hotel.

We have kicked up a stink previously and threatened to add interest etc, but they aren't bothered. We've called head office to speak to the financial director and he doesn't take calls from suppliers....... that says it all.

One of their managers recently left the company and said that he was sick and tired of taking calls from their suppliers chasing money. He told us that they have a rule of 3 suppliers for everything, so when the goodwill / patience has run out of one supplier they move onto the next one.

Is the change in payment terms something that the venue manager or your contact is aware of? They may not be aware that the company has changed their payment terms? Can the offer a way around it, send / date the invoice when they place the booking so the 60 day period ends close / on your due date?

If that doesn't work, taking the long way to the point, i agree with Shakermaker, you can try and yes you are legally entitled to charge if you wanted, whether they would still use you is another thing.

[Solitaire Events Ltd]

once you get going with them darren and are doing regular gigs you should have a payment comming in from them monthly,just the initial 60 day period while the ball is rolling if that makes sense

I wish it was that easy!

I have had this situation before and it took me a few years to get onto immediate payment (normally about 10 days) with a couple of venues so I know it's achievable.

What makes me angry is that they just ignore the law and do what they want and it's always the 'little man' who suffers.

If I were to take my wife to dinner at one of their venues and tell them that I want 2 months to pay, what do you think their answer would be?!

[DeckstarDeluxe]

As long as they don't have a track record of not paying I'd "suck it up and see".

As most of the events are during xmas? prehaps get all them done and advise them that if they want to book next year that you'll have to bring the payment date forward?