Payment Terms Not Agreed

Lynda, sorry to break it to you but your supplier’s in the right here.

If you don’t agree payment terms up front then a debt’s payable on demand. If you have no agreed terms with the supplier then late payment charges and interest are payable after 30 days. A document served by fax or email is as enforceable as one sent by mail or delivered in person. If your supplier AGREES that invoices and PODs may only be delivered by mail than that’s up to them but you can’t impose the requirement retrospectively. Unless you’ve stipulated in advance of forming the contract that a POD is required before payment then the supplier has no obligation to supply one. You could dispute the invoice on the grounds of non-delivery but unless you actually had reason to believe that the goods weren’t delivered it wouldn’t be a valid reason for witholding payment.

This might not be ‘the way we do it’ but it’s the law. We all enter into contracts for services casually on a daily basis without ever full agreeing terms. We can’t really complain when our lack of attention to detail comes back and bites us afterwards.

Maybe we should have a set of T&Cs that all ‘Network’ members are obliged to operate to when trading through the exchange? A lot of fuss maybe but it would stop a lot of misunderstandings.
 

Posted under Courier and Freight Exchanges, Courier Financial Issues, Late Payment, Uncategorized

Posted by Alec at 4:35 pm, October 20, 2006

2 Comments so far

  1. Alec added on  October 20th, 2006 at 17:39

    “Does that mean from now on if we bid for a job on ‘Network’ or on any other system then if payment terms are not agreed up front then the invoice is deemed as being payable immediately.” – Yes, that’s exactly what it means. But as long as they pay within 30 days there’d be no cost implication to them because statutory charges only kick in after 30 days and you wouldn’t have had chance to start legal action. You don’t HAVE to insist on your invoice being paid immediately of course.
    “If I were to go by what the law states then i would be out of business because none of my customers would pay me in 7 days.” But you agree to provide them with a credit facility under your terms or agree to accept their terms in advance. They’ve no right to impose their terms on you without your permission.

    Here’s something to think about: If your supplier, who you’ve not agreed terms with, faxed you an invoice for £20 on 1st October and you don’t pay it until 30th November then you’re automatically liable for a £40 late payment surcharge – even after you’ve paid the invoice. The supplier can claim this from you at any time in the next 6 years and there would be no possible defence against it. If a supplier invoices you 5 times a week and you habitually pay him on YOUR terms without any agreement then you’d be liable for a late payment charge on EVERY invoice that was paid later than 30 days. If your supplier was a limited company and was subject to insolvency proceedings then the liquidator has a responsibility to recover all outstanding debts, they could quite easily go through your supplier’s records and start chasing late payment charges from years before.

    The implications are quite worrying really, so the best option is to pay your suppliers within 30 days of invoice date whenever possible – they’re in a much stronger position than you might think.

  2. Alec added on  October 23rd, 2006 at 08:47

    Lynda, you’re looking at it from the wrong way round – credit is given, not taken. It’s up to the CUSTOMER to ensure that they have an agreement with the supplier over payment terms and that they can prove it. Mentioning the terms you will pay on in your directory entry is a start, but unless you can prove that your supplier’s actually read your entry before carrying out the job for you it would add nothing to your case.

    As I’ve mentioned many times before, a supplier (subby) is in a much stronger position that either they or their customers may think and many companies are treading a dangerous path by continually paying late and not establishing written agreements with their suppliers. The potential debts (late payment penalties) that are being stored up for the future could cripple many companies.

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