What if I get some details on the invoice wrong?
Simply create a new invoice with the correct details on and email it across to us. We will terminate the previous invoice and send the amended one along with an explanation to your client. You will just be charged as if it were a new invoice. Alternatively instruct us to make the amendments on your behalf for another small fee.
Can I set up recurring invoices?
Yes, if the amounts and details are the same each time just send us an authorisation email along with the invoicing frequency / dates (e.g. 1st of the month, 4 weekly, bi-monthly) and we will continue to create/ reissue invoices until advised otherwise.
How and when do I pay you?
We will email you an invoice at the end of every month for all fees raised during that month. Payment terms are 7 days and BACS payments are preferred. If instructions are issued to proceed with Court Action, the solicitor fees and Court costs may be payable immediately.
Do you take on invoices that we have already issued or are already outstanding?
Yes we can, but obviously if our invoice template is not used then there may be some delays or issues within the process depending on your existing invoice and terms and conditions.
What if my client refuses to pay our invoice?
Assuming that the invoice is correct, there are debt collection procedures that we follow according to your chosen credit control plan.
Can I alter my chosen credit control plan or cancel the invoice completely?
Yes, with your instructions we can amend the plan or stop at any point and you will just be charged for services up to that point. See our terms and conditions for full details.
What happens if advance payments are required?
Sometimes a contract will stipulate that the whole contract price needs to be paid before the delivery of the goods or the performance of the service. If payment is not paid in advance then the late payment legislation will apply once the goods have been delivered or the service completed. This applies to late payments of advance instalments as well.
I forgot to tell you that I received a payment and you have sent a notification to our client about the application of the Late Payment Legislation. What happens now?
We will email you prior to the notification of any late payment fees to confirm that payment is still outstanding to try to prevent this happening. If there is a mis-communication and we have sent the notification then we will notify your client that the debt has been settled and no charges are due. You will still be liable for our recovery fee to reflect the work undertaken to that point.
What if I only get a part payment?
Sometimes businesses will send a part payment of an invoice, in particular if late payment fees have been added they may ignore these fees and just pay the original invoice amount. Interest will then continue to accrue on any remaining balance until this is also paid in full.
For example, a debt of £1000.00 has incurred a late payment fee of £70.00 and 2 weeks of interest at £0.23 per day (£3.22). The debtor sends payment for the original £1000.00. A balance of £73.22 remains which will accrue interest daily (£0.02) as before until paid. Usually 7 days notice will be given for payment of this outstanding amount, after which a 'fresh' debt collection process will follow with the issue of a solicitor's letter etc.
How do you calculate the interest?
Interest is calculated at 8% above the Bank of England reference rate, currently standing at 0.25%. The Base Rate as it stands at 31st December will be the reference rate for the following 6 months, then the Base Rate at 30th June will be the reference rate for the following 6 months and so on.
So on a debt of £1000.00, 8.25% equates to £82.50, which when divided by the number of days in the year (365) is equal to £0.23 interest per day.
When calculating late payment charges, do you include VAT?
When working out which tier of compensation is due, include any VAT in the invoice amount.
For example, if your debt is £900 + vat of £180.00, the total is £1080 which takes it into the £70 compensation bracket.
When applying this fee to the overall invoice amount, VAT is not applicable to this or any interest charged or any debt recovery fees.
Does the late payment legislation apply to individuals?
No, they only apply to commercial debts i.e. where the goods/ services are purchased for use in the course of business and not for an individual's personal, non-business use (these are classed as consumer credit agreements).
Do you have to submit another invoice if charging for late payment?
Not with our invoices as these potential late payment charges are stated on the original invoice. If you send another amended invoice with the charges on this may be treated as another separate invoice and confuse/ delay things further. Also you don't know how much interest to charge until the payment is made. If it gets to the point of applying late payment fees then we send an email to the debtor explaining that the charges are being applied and detail the revised amounts payable. In our process, once payment is made we send a final 'paid' invoice detailing all of the separate charges, which is again included in your 99p fee!
Do you have to notify the debtors if you are charging fees under the late payment legislation?
Yes, as explained above this is done by email as this is auditable process. It will greatly help your case if you can prove the notice given with regards to these additional charges. Again, this is part of our process and is included in the 99p fee.
If the debt is till not paid and court action is required, are there additional fees?
Yes there are. These consist of court fees and solicitor fees but the good thing is that in successful claims with a Late Payment Demand, these are virtually all claimed back from your debtor. For consumer, rather than business debts, where a Letter Before Action is issued, there are ceratin costs or proportions of costs that cannot be reclaimed from the debtor.
My client has been paying late for years, is there anything I can do?
As long as the payments are past the agreed credit or statutory 30 days then yes, you can claim back fees for the previous 6 years in England, Wales and Northern Ireland, and 5 years in Scotland. But this is only really adviseable if you do not wish to maintain a business relation with your client for obvious reasons.
What are the repayment plans that you mention in the credit control plans?
Sometimes if a payment is going to be late, rather than possibly start debt recovery procedures, we can arrange payment to be made in installments, with interest charged. We would liaise fully with you before going down this route, lenient and forgiving as it may be, it also increases the risk of non-payment due to bankruptcy/ insolvency of your client.
When does a payment become late?
This ultimately depends on when the credit period (if any) starts and is know as the 'relevant day'. This will usually be the later of :
1. when the provision of the services/ goods was completed
2. the date that the client received notification of their debt (i.e. the day they received your invoice)
If the statutory 30 days period is used, then the client has 30 days in which to pay the debt starting from the later of the 2 processes mentioned above. After this 30th day the payment becomes late and the legislation can be applied.
Do our invoices get paid to you first?
Absolutely not. Your invoices /debts are paid directly to you in the usual way.
Is it a flat rate 99p for any invoice, regardless of amount or complexity?
Yes. There are possible additional fees however, for example if we have to make amendments or resubmissions of invoices or if we have to apply any Late Payment legislation. Please see the 'prices' page for full details. .
What are the additional Late Payment legislation fees?
If the late payment legislation is applied we charge additional collection costs which reflect the additional work input in getting to this stage and these are flat rate fees of £25.00, £40.00 or £60.00 depending on the invoice amount. These costs are normally recoverable from your client with successful claims.
How do we pay you for your services?
At the end of each month we will invoice you for all fees raised during that month, regardless of whether the debt has been paid or not. Our payment terms are 7 days.
Are you solicitors?
No we aren't qualified solicitors but we tend to use Thomas Higgins, arguably the best (and most economical) debt collection solicitors in the UK. We can liaise with them (or any solicitor) on your behalf if you wish by using our legal intermediary services. We gain or charge no commission, reward, favour or benefit whatsoever for using any solicitors and we don't charge 'introductory' or 'management' fees or anything of the sort.
My client keeps contacting me with regards to the new invoicing procedures, what shall I do?
Try to explain that you have outsourced the invoicing part of your business for cost reduction and efficiency purposes and that such queries should be directed to us. People are often against change initially, especially if it means that they might have to pay their invoices in a more timely fashion. As a result you may get some avoidance tactics such as queries or even 'complaints' coming your way initially but it is important to be firm. By all means take down any queries/ concerns that they have and assure them that you will pass them onto us. But insist that we are still responsible for your invoicing and payment procedures. You have to remember that most people are naturally against change and may be resistant to it initially. But like most changes in life, there will often be a potential sticky patch before you begin to see the benefits and improvements. But if you don't address the situation then things will never improve.
My client is threatening to stop using us?
You may even get clients threatening to cease trading and if this is the case are these really clients you wish to work with, bullying you to do things on their terms? These threats however will often just be tests of your resilience on the matter. If you buckle now under pressure and go back to your original situation, then things will never improve and your cashflow and business position shall always be precarious. You must remain firm and "apologise for the new invoicing procedures and that they have made you reconsider future trading with us but that in order for your business to remain competitive and viable in the future then it has been a necessary step to take."
My client says that he won't pay me until he's been paid - is this right?
This used to be commonplace in the Construction sector but has now largely been abolished . Usually this is not enforceable - your contract is with your client, not with other businesses down the chain. Your client cannot delay payment to you because they themselves may have inadequate invoice collection processes in place.
Part of the invoice is under dispute - what happens now?
Sometimes, and often genuinely, part of an invoice may be disputed. For example there may be 12 items on an invoice but your client is disputing just one of them and is withholding the whole invoice payment until it is dealt with. In this case, where your client has admitted that part of the invoice is correct, they should pay for this correct 'part' while the disputed part can be withheld. As such, the Late Payment Legisaltion can be applied to this correct section of the invoice. If upon querying the dispute, there happens to be no errors, then this disputed amount can be then also have the Late Payment legislation applied to when it first became overdue. If there was an error on the invoice, then this disputed part must be invoiced again correctly with 'fresh' payment terms and no penalties will apply at that point.
What is a 'verification period' and how long is it?
The supply of some goods and services will allow for a 'verifciation' period and this is the length of time that is allowed for accepting goods or services and is set at 30 days from the completion/ invoice date. There are rules that allow for a further period after this verification period if this is agreed in the contract and is not deemed "grossly unfair". Once this period is up and the goods / services are 'accepted' then the relevant day is at the end of this 30 day verification period and the payment credit period starts.
My client has terms in the contract stating that the Late Payment legislation will not apply, is this right?
Probably not - you can't avoid statutory requirements simply by saying you don't agree / abide by them. Such terms would be scrutinised with a reasonableness test under the Unfair Contract Terms Act 1977.
If your client is a consumer e.g. an individual who has used your services for personal use and not in the course of business, then the Late Payment Legislation will not apply. Instead we include 'contractual interest rates' on our invoices that will in effect penalise your client for late payment.
I have agreed to a 60 days payment period in a contract. Can you impose a 30 day period on the invoice instead?
We can put a 30 days payment date on the invoice but this will not over-ride the terms of your agreement. In fact it may lead to us having to resubmit the invoice at a later date with the correct details on which will not only incur additional costs from ourselves but may also delay your payment further. Always strive to get all of the details on your invoices correct.
I have been invoiced for collection fees from you but my debtor still owes me money- why?
As described on our website, we do not offer a no win no fee service in order to keep costs to a minimum for everyone. At the end of each month we invoice our clients for all fees raised in that month. So if we confirmed to your debtor that we were applying the Late Payment Legislation, you are now liable for our collection fees which are a flat rate £25.00.
Could you alienate or lose customers if you use the legislation?
There is always the possibility that this could happen but this is minimised by handling the process professionally and in the right manner. It is important to realise that the primary aim of the legislation is to act as a deterrent and encourage businesses to pay their suppliers on time and is not designed to merely encourage claims for compensation. Ask any professional business person, solicitor, business advisor or bank manager and they will all say that the risks of not operating proper credit control far outweigh the risks of possibly alienating clients through the use of proper credit control. They will all encourage the use of late payment terms in your contracts and on your invoices as an integral every day part of your business.
So before you even contemplate not using the legislation to your benefit, did you know that....
a recent insolvency survey found that in a 12 month period, late payment was the primary or major cause of 23% of insolvencies
the same survey also revealed that the failure of a supplier or customer was the primary or major factor in another 20% of insolvencies!
It's bad enough if you lose a main customer through insolvency, but if this happens with them owing you money, this bad debt could be the final nail in the coffin for your own business.
If you do have an important, yet consistently late paying client, that you think may be 'difficult' about your new approach or even threaten to stop trading with you, we have a small trick up our sleeves.
Within the payment terms on our invoices we 'mention' that under the late payment legislation 'we are entitled to claim compensation and interest for any late payments made within the last 6 years (in England, Wales and Nortern Ireland, 5 years in Scotland), even if we are no longer trading with you.'
Now that gets them thinking!
What you are saying, in a very subtle way is, "We really want to keep doing business with you but we need to be paid on time. If you cease trading with us then we have nothing to lose by claiming compensation and interest for every late payment made over the last 6 (or 5) years."
So when does a payment become late?
Where there is an agreed credit period, and the supplier has agreed, either in writing or orally, a credit period with the purchaser, the payment is late if it is made after the last day of the credit period.
If no credit period has been agreed, then the Act sets a default period of 30 days after which interest can run. This default period does not constitute a statutory credit period. Where no credit period is agreed in a contract, the principal debt will still become due from the moment the goods are delivered or the service performed.
What happens if the contract requires advance payment(s)?
There are several ways in which a contract can require payment(s) to be made before the goods are
delivered or the service is performed. The Act does not give a right to interest unless at least some of the goods have been delivered or part of the service performed unless contractually agreed. If
the parties wish to agree otherwise, they will need to make provision in the contract for a substantial remedy instead of statutory interest.
Some contracts stipulate that the whole contract price should be paid before the goods are delivered or the service is performed. If payment has not been made before the goods are delivered or the service is performed, then statutory interest starts to run from the day after the day on which all the goods are delivered or the whole service is performed.
Other contracts stipulate that payment should be made by instalments in relation to a delivery of any part of the goods or performance of any part of the service. Where payment of such an instalment is made late then statutory interest runs on the instalment from the day after the day on which the part of the goods are delivered or the part of the service is performed.
Finally, where an advance payment forms part of the contract price, but is not related to the delivery of some of the goods or performance of part of the service, then statutory interest runs from the day after the day on which all the goods are delivered or the whole service is performed.
What happens if there is no agreed credit period but the purchaser usually pays at the end of the month following the month in which the invoice is received?
Some purchasers and suppliers have a long-standing relationship in which this kind of payment arrangement has become standard practice. In this example, the credit period is considered to end on the last day of the month following the month in which the invoice is received. Interest starts to run on the next day.
How do I make a claim for interest and / or reasonable debt recovery costs?
When the payment is late, a supplier should inform the purchaser that he or she is claiming compensation and interest on the late payment under the late payment legislation. It may be helpful to indicate the daily rate of interest that will be claimed, although it is not necessary to do so. The amount of compensation for debt recovery costs available is determined by the table below, which the supplier can refer to.
|Size of unpaid debt||Sum to be paid to the creditor|
|Up to £999.99||£40.00|
|£1,000.00 to £9,999.99||£70.00|
|£10,000.00 or more||£100.00|
For the purpose of claiming interest and compensation for debt recovery costs notification can be oral, but it is better to email or put it in writing, as this makes it easier to prove that notice has been given. Information regarding the amount of compensation, recovery charges and daily interest are itemised on all invoices we send as standard practice. We take care of all of these processes when we manage your invoices.
How should I inform my customers that they will be charged interest and/ or additional costs if they pay late?
Rather than using it as a last resort when faced with an overdue invoice, the late payment legislation is
designed to be a deterrent against late payment, and to be used as part of standard business practices and credit management techniques. In much the same way as a supplier reminds purchasers that
payment is due within a specified time limit, the supplier should also remind them that interest and compensation for debt recovery costs will be charged on overdue invoices using the entitlements
provided by the late payment legislation.
In addition to informing purchasers verbally of their right to charge interest and/or claim compensation for debt recovery costs as part of standard payment terms, suppliers should state clearly on all written communications, credit application forms, order confirmations, invoices and all contracts:
"We understand and will exercise our statutory right to claim interest, compensation and debt recovery costs under the late payment legislation if we are not paid according to agreed credit terms."
Again, we take care of all of these processes when managing your invoices.
Do I have to charge interest and/ or debt recovery costs to all late payers?
No. It is not compulsory to use the late payment legislation. A supplier is free to decide whether or not to make a claim for interest or compensation for debt recovery costs. But if you have made statements on your invoices with regards to late payment action and then fail to take action in some form or other, it totally undermines your processes and overall cerdibility and empty 'threats' are worse than making no threat at all. If we are managing your invoices for you and get to the stage where Late Payment legislation applies, we will still charge the relevant collection fee to you to reflect our work in getting to that stage, even if you instruct us not to apply the legislation.