£3,000 late payment fine from Jewson’s - whilst company closed.

Grumpy_chap

How much is the original debt for which you requested delayed payment?
As you have an e-mail from Jewson accounts, that should make it possible to get the issue closed out quickly and easily - even the Jewson solicitor will see that there is nothing there.
In commercial contracts, there will be a mechanism for late payment and that normally starts with interest accruing at a pre-specified rate (or calculation above base rate) and then there is a process of reminders and warnings - companies do not just jump straight in to legal steps.  As this all happened within lockdown, it is only three months and it is unusual for companies to get through all these steps in such a short time frame.
Between the start of lock down, what other communications have you received from Jewsons?
As others have said, Jewsons cannot "fine" you.  All Jewsons have is the redress process outlined in the contract.  This does sound like it could be a scam.

Grumpy_chap

Sorry, I just noticed that you confirmed earlier that
 LJC18 said:

 ‘fine’ was my wording we are incurring a ‘late payment charge’. 

I also looked at the standard trade account terms on the Jewson website.  Your account may have different terms but I would not expect anything vastly different.  Looking at this:

• Standard payment terms are last day of the month following month of invoice.  Assuming you took the last deliveries in March, payment would be due to Jewsons at the end of April.  You are only now 2 months late.
• Late payment is at 8% above BoE base rate.  As the base rate is now so low, I am going to use 8% as the interest rate.  That is an annual rate.  The £3k charge is accrued over 2 months, so multiply that up, it would be (3 / 2) * 12 = £18k over a whole year.  £18k as the interest at 8% would indicate a £225k amount outstanding.  I am sure that can't be correct - if it was your company would be large enough to just ask the normal solicitor you deal with rather than a public forum for advice.
• There is a non-payment / insolvency clause.  This allows Jewsons to apply up to £100 compensation for a debt in excess of £10k.  It also covers if Jewsons instruct debt collectors or solicitors, then they will seek to recover all the costs of the same.  Apart from the £100, I would not normally expect this to be actioned as the first step.  Are you sure you did not miss any communications from Jewsons?

Jeremy535897

A late payment charge of £3,000 suggests a large balance outstanding as they charge 8% above base rate for late payment, so 8.25% per annum, or say 3% over the pandemic. That implies a balance of £100,000. I am not clear why Jewsons need to take legal advice on a clear and no doubt commonly enforced standard term of their contracts. Maybe I am misunderstanding the position, but I assumed we were talking about a sole director company here, that I would expect to buy substantial amounts of materials only when a job was agreed, and preferably when payment was already received from the customer.

 The Federation of Small Businesses suggests Jewsons pushes its small suppliers to accept 10% or more in discount for being paid within 60 days, and is not on its favourite large businesses list.

yksi

You seem completely shocked at the idea you'd still have to pay on time despite the pandemic. I know it's not your fault that Covid-19 happened or that the business had to shut its doors, but there is still a basic principle. It isn't your fault but it's still your responsibility to pay. No point saying you can't help it; you still have to pay. You might be better off trying to solve that problem proactively than in digging in your heels saying it isn't your fault.

In the grand scheme of things, I wonder how many businesses will pay attention to the fact that they were running so close to the wire that there was no cash reserve to pay current existing debts? It's no fun living hand-to-mouth and unfortunately this is a very much repeating theme, over and over again people say that they were relying on next month's income to pay last month's bills

Splatfoot

yksi said:

You seem completely shocked at the idea you'd still have to pay on time despite the pandemic. I know it's not your fault that Covid-19 happened or that the business had to shut its doors, but there is still a basic principle. It isn't your fault but it's still your responsibility to pay. No point saying you can't help it; you still have to pay. You might be better off trying to solve that problem proactively than in digging in your heels saying it isn't your fault.

In the grand scheme of things, I wonder how many businesses will pay attention to the fact that they were running so close to the wire that there was no cash reserve to pay current existing debts? It's no fun living hand-to-mouth and unfortunately this is a very much repeating theme, over and over again people say that they were relying on next month's income to pay last month's bills

Whilst I do agree that we should all have cash reserves, it's not always possible. We always had savings etc, up till about 10 years ago and we've never really managed to get back on that even keel again. We live month to month and I hate it.