£10 invoice discount or surcharge

Well it’s an odd way of doing it, but perfectly legitimate. It’s reasonably common to receive an invoice for a larger amount than agreed, with a discount to reduce the sum the originally quoted figure.

A £10 supplement for paying after 30 days is perfectly reasonable and is less than the £40 we’d charge you for the same privilege. Remember that your supplier can impose whatever terms on you that they wish unless an agreement’s made before work is carried out.

Disputing part of an invoice isn’t legal grounds for non-payment of the admitted part.

Posted under Courier Financial Issues, Late Payment, Legal Issues

Posted by Alec at 4:17 pm, March 3, 2007

18 Comments so far

  1. Alec added on  March 6th, 2007 at 16:24

    Surely it’s only an issue if you inend to exceed the supplier’s stated terms? If not then why is it a problem?

  2. Alec added on  March 6th, 2007 at 16:40

    For every invoice they pay later than 30 days (or other agreed terms) they owe you a minimum of £40 anyway. You can go back 6 years to collect the late payment charges as well.

  3. Alec added on  March 6th, 2007 at 16:42

    What’s wrong with encouraging prompt payment Jeremy? This has been done for years – terms like “2% 15, Nett 30” used to be common on invoices.

  4. Alec added on  March 6th, 2007 at 16:50

    There’s no real reason to add the £40 onto the invoice from the outset Paul – except maybe to underline the point that you intend to charge it if you’re not paid on time. There’s no reason to send a credit note once payment’s received either – if you’ve abided by the terms of the invoice that allow you to py the lower amount then you can pay the lower amount.

    Personally I think a note on the bottom of the invoice stating that you intend to make use of the Late Payment Legislation if you don’t receive payment on time is good enough.

    I’m just prepearing the late payment charges for an ex-customer that has paid us three weeks late on every invoice for the last 2 years. I knew they were good for the money and it was only a feww hundred a week anyway. They now owe us £4,000 in late payment charges – which they coould have avoided if they’d paid on time and then hadn’t allowed one of our ex-subbies to poach the work. £4,000 pure profit – we’ll get it as well.

  5. Alec added on  March 6th, 2007 at 16:54

    Stephen – it’s not as common as it used to be, but it still happens. There’s a ‘Network’ member in Nottingham that does it for example. The price quoted includes discounts, which are withdrawn if you pay late – a perfectly equitable arrangement. The late payment legislation has made it largely redundant though.

  6. Alec added on  March 6th, 2007 at 16:58

    Paul, (as you might have noticed) adding it from the outset would just introduce confusion and resentment – and maybe give some people the excuse they need to try and introduce a payment delay.

    There’s nothing to stop you using the ‘customised footer’ feature on ‘Network’ invoices to add a standard late payment charge notice though – just to remind customers of your statutory rights.

  7. Alec added on  March 7th, 2007 at 12:09

    You don’t have to give any notice at all Jon. The very fact that an undisputed invoice has been paid late means that you’re automatically entitled to charge the late payment fee and interest. The late-payer is liable for the late payment charge even if you don’t ask for it at the time. So you’ve got up to 6 years to pursue it.

    See http://www.payontime.co.uk for more details.

  8. Alec added on  March 7th, 2007 at 12:38

    Jon, the late payment charge is a debt like any other and if anything is more proveable than most. If you received payment late then you’re owed it. It might piss your customers off if you chase it but they can’t avoid payment.

  9. Alec added on  March 7th, 2007 at 12:54

    The fees are set in law Nigel, not just some bank’s rip-off conditions. The law was established under an EU directive, so it’s not likely to be overturned.

    It’s £40 for invoices up to £999.99, £70 for invoices from £1,000 to £9,999.99 and £100 for invoices over £10,000.

  10. Alec added on  March 7th, 2007 at 13:29

    Absolutely. It’s a statutory charge, not contractual. You don’t even have to have agreed payment terms with the customer – if there’s no payment terms agreed then the late payment charges apply 30 days after the invoice date.

  11. Alec added on  March 7th, 2007 at 14:12

    I think it would be a bit foolish to back-date late payment charges to companies that you rely on repeat business from. I’d be surprised if any of them used you again. If you’ve no wish to do business with them again though, or if they’re using someone else anyway, it’s a very satisfying parting shot at them.

  12. Alec added on  March 7th, 2007 at 14:26

    We will. We’ve got two years of invoices delivered by email so I can prove when they received them and two years of remittance advices showing payments arriving three weeks late. There’s no room for dispute.

    This is what companies that habitually ignore their suppliers’ payment terms are setting themselves up for. It only takes a few vindictive b*****ds like me to make life very painful for them.

  13. Alec added on  March 7th, 2007 at 16:53

    So the ‘big boys’ should be able to dictate their own payment terms should they? Presumably the ‘little boys’ just have to take it up the arse and say thank you while financing these larger businesses?

    That’s exactly what the late payment legislation was introduced to prevent. If everyone made use of the legislation then your ‘big boys’ would either fall into line or have no suppliers. You’re quick enough to criticise people running for peanuts yet you seem to be encouraging people to provide free bank loans to other companies. Get a clue.

  14. Alec added on  March 7th, 2007 at 17:15

    Sticks and stones……

    So it’s OK for companies to get fat by taking interest-free credit from their suppliers, but not OK for them to get fat by making a profit from supplying work to those suppliers?

    With logic like that I can see why you have such a problem with running your company legally.

  15. Alec added on  March 7th, 2007 at 17:17

    And if you want to accuse MY company of something you’d better make very sure of your facts first.

  16. Alec added on  March 7th, 2007 at 17:27

    I know that MY company is run legally, has no debts and that we pay all invoices within 7 days. You can’t say the same.

    I also know that I don’t resort to threats when I’ve lost an argument. Grow up.

  17. Alec added on  March 7th, 2007 at 17:43

    I didn’t say your company was in debt – I said you can’t make the same three claims as I can. Obviously nobody knows anything about the financial state of your company as it seems that you’re unable to file your accounts on time. I can’t imagine what you believe the relevance of the financial position of a company’s directors has to the company’s own financial standing. You do understand what a limited company is?

  18. Alec added on  March 7th, 2007 at 17:51

    As I said. Grow up.

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