Invoices - Late % Penalty Charges & Revised Terms

RipleyS

I require some advice in respect of invoices.

I have a client who has failed to pay an invoice within the agreed terms and are also failing to respond to all communication. I have issued a warning that the invoice is liable for Late Payment % charges and that this will also now be due.

Within my terms, I also have an agreed clause that failure to pay the invoice within the agreed terms, 15days, that this invoice can be re-calculated at our full rate.

As I have had no response again, I now need to issue the first of the new invoices with the % late payment charge added. (And should this not work, I will use the right as per our terms to charge at our full rate, which is considerably more. I am hoping the threat of this will make the client pay.)

My query is around how to invoice bot the % for late payment and should it arise the re-calculated amount?

Do I credit the original invoice and issue a new invoice? Do I send an invoice for the added % charge? And similarly with the extreme case, how do I invoice at the penalty rate agreed in our terms? Do I credit all the invoices to date and issue the new one? I have no idea which is best to do? Is it a case with all the invoices I also illustrate; Charge, VAT, Late % penalty, Breach of terms etc. then show a new calculated bill?

Hopefully someone can assist..

martindow

I assume that you have evidence of the your t&cs provided before or at the time of the first invoice, preferably with evidence of this - the customer's signature for instance.

I would send a new invoice for the full amount along with a credit note for the original invoice. In a covering letter I would reiterate the terms and the penalty clauses agreed to.

The customer may well be provoked into paying the original invoice. I would accept this but think very carefully about how to deal with them in the future.

If you get no money from them and you need to make a claim then you can include the interest payments at the specified percentage.

looknohands

I actually had a client similar to this with whom I added terms to my invoice, we had no contractual terms, no contract, no signatures, just a quote as the work was a couple of days.

I worked on the project and they were very responsive, wanting updates every few hours, then afterwards they, unfortunately, didn't want to use the work for their campaign, so the last correspondence I received was 'thanks for your samples'. Which seems to be a steer towards, thanks for trying...

So in reply, I stated I'd need to be paid for work done as quoted. But from then I received no reply, they ignored communication and I even started getting bounce backs from their e-mails.

After 1 week I just sent an invoice outlaying 30 days payment terms as we agreed in the quote along with an additional stipulation that interest would be accrued at 2% per day after the 30 days, this we didn't agree, but by this point I was convinced they were not going to pay due to them not communicating anymore, so stuck it on for good measure.

30 days passed and no payment, so I figured I'd give them a nudge, day 31 I then e-mailed their accounts team and notified them that the 2% interest per day was accruing and I would be sending them weekly statements of their account.

Next day a cheque comes through for the full amount, (no interest but I let that slide)
I was amazed they'd paid to be fair.

This was the first time I thought I had a non-payer, but I think it's good to add to invoices, particularly where you have no contract, just verbal quotes, though I'd imagine it should be stipulated in the quotation beforehand usually.

I've been told that drawing up a contract for small jobs can be pointless, the amount of effort to chase a payment legally from a contract for a small business would be time-consuming to production, so it would actually leave you worse off. It could be seen as more of a deterent so to speak, you wouldn't actually use it.

I've never had a non-payer in 6 years in business, but this was the closest I came.

jamesperrett

Quite a few of our suppliers send us an order confirmation whenever we place an order with them. This confirmation very clearly states that the order is only accepted if it is subject to their terms and conditions which presumably gives them a better legal footing if there is a dispute.