Invoice Payment terms

[oli]

Hey all

 

I have an outstanding invoice that is going to become late payment tomorrow, my question is does the cheque have to arrive tomorrow or do funds have to be in my account tomorrow?

 

Cheers

 

oli

[paulears]

At the moment, cheques are taking even longer to clear than usual, and with my business bank - Alliance & Leicester, from getting the cheque in the post, to getting the funds cleared easily takes another week. The cheque itself is an instruction to pay, so in itself, does not constitute payment until it clears. So the payment is late, even if it turns up tomorrow. One of my clients I've noticed, signs the cheques at least two weeks before they arrive - just an office dealying tactic. get the boss to sign them off, then hold on to them for a while.

[Bobbsy]

What Paulears says may be correct in law (though I suspect it probably depends on how your T&Cs are phrased) but the reality is that you'll probably have trouble enforcing anything if the check is issued on the last day of a payment period. The vast majority of companies have an actually policy of posting the check on the final day of the 28 days (or whatever term is agreed).

 

...and I think I'd change bank if clearance is taking that long. I can practically guarantee that the bank is "using" your money for 2 or 3 days before they put it in your account.

 

Bob

[paulears]

I've got nothing but praise for the account - it's very easy to manage and does exactly what I want - BUT I don't have an A&L branch where I live, so cheques need to be taken to the post officed where they get sent to A&L - this is what takes time. I'm not too bothered because most ins and outs are done electronically and I have just one client who won't 'go modern'.

[David Lee]

I have an outstanding invoice that is going to become late payment tomorrow, my question is does the cheque have to arrive tomorrow or do funds have to be in my account tomorrow?

 

Technically it will be a late payment. Realistically, if it arrives tomorrow then I would not care - it is not worth chasing the interest etc and ruining relationships with a company over a couple of days. Of course if the cheque doesn't arrive tomorrow then you should start chasing straight away - google late payments of debt act.

 

Note that most bills you get I.e gas/ electricity/ credit cards all state the date the money is due and warn you that it may take up to 5 days to clear into their account and to pay early to ensure it is cleared in their account by the due date. (sorry about the ramble I think I may have confused myself there)

[Rob_Beech]

Agreed.

It should be cleared by the invoice terms which MUST have been agreed to before the event / gig / products sold etc. If nothing was agreed to the standard time is 30 days from the date of invoice. If yours are 28 days but they had no way of knowing this until you issued an invoice AFTER the event then technically they have 30 days.

 

It would be in their best interests to pay it on time to the shorter of the 2 terms to keep up good relationships between the client and the supplier. Of course, it's increasingly rare that this happens.

 

I do EVERYTHING I possibly can to pay people well within their terms, and most of the time I can pay it the first time I get chance after a weekend. Eg, do a gig for me on the Friday and I'll deal with it Monday, usually transferring and clearing the same day. There are times when due to people who pay ME are taking their time (this by the way is ALL THE TIME) that it can get more difficult to pay people quite so quickly. It's then and ONLY then that I utilise the payment terms and will pay them when I can within those terms. If disaster strikes, which it is starting to at the moment, then I LET PEOPLE KNOW. Usually people are quite understanding.

 

In short, if the cheque arrives tomorrow then YES it's late, but as David rightly says, is it worth potentially ruining the relationship just becasue its a few days late?

[dwents]

Has anybody else noticed since the credit crunch big companies are taking that few days longer to pay.

we used to get paid by one company on the 13th of each month now it's the 22nd nearly ten days extra

[David Lee]

Fortunately not yet. All my clients are paying at their normal speedy/ sloth like (delete as applicable) rate.

[boswell]

From the other side of the fence,

We pay all our invoices in 14 days max, but we have noticed that some suppliers have started to issue a final demand 5 days after the invoice date (regardless of terms or our good payment history),

When we query it, it is blamed on the computer!! We then start to look for alternative suppliers.

We also have used the 14 day settlement angle to get a better deal from suppliers!

 

ps, we are NOT looking for new suppliers!! :P

[JazzAV]

I don't know if you are just asking technical question or if you are actually looking to see if you can make an issue from the late payment. I would say that I would be very happy if I received a Cheque (that cashed) from every client 2 days late and then another few days to process it.

 

I can wait anything up to an extra month to get paid (if not longer) yet my suppliers and freelancers are always paid in 30 days, by Bacs. I have to question why people are even still using cheques.

 

We have a cheque book we use, to pay the odd random supplier when it is the easiest thing all round to do but that tends to be C.O.D terms.

 

I would approach your client about moving to Bacs payment

[zonino]

When we query it, it is blamed on the computer!!

 

this isn't unusual and is more than likely correct. Unless you are a "Key" customer, your account is likely to be "dunned" (chased for payment) automatically.

 

I can wait anything up to an extra month to get paid (if not longer) yet my suppliers and freelancers are always paid in 30 days, by Bacs. I have to question why people are even still using cheques.

 

We have a cheque book we use, to pay the odd random supplier when it is the easiest thing all round to do but that tends to be C.O.D terms.

 

I would approach your client about moving to Bacs payment

 

I know that the company I work for only does cheque payment runs every tuesday & friday, whereas BACS payments get made every day. I wouldn't be surprised if the cheque payment run gets reduced to once a week in the near future.

 

Definately ask to be paid by BACS if atall possible. It (generally) makes things work much better for everyone, and reduces the admin associated with payments!

 

Also check any standard terms and conditions that the company may have. By accepting our Purchase Order, you accept our T&Cs which have standard payment terms as part of them.

[paulears]

BACS is a great help for small businesses like me and the real big boys, but it falls down in the middle ground where the company is small enough for 'the owner' to be involved in day to day operations. I've noticed that despite their high turnover, these kind of companies frequently use cheques that require two signitories for payments over £500, and these type of businesses find it hard to devolve BACS type payments down to the general office staff. So what happens is that the office people set up the transfer, but it has to wait to be authorised by the people who sign cheques, and as they tend to do things at certain times, you have to wait. Some are not computer literate, but wary of things like passwords and staff access to the bank accounts. This type of business I've failed so far to get to do it the modern way. One form I deal with now has the cheques signed locally by one person, then the entire lot gets posted 100m away to where the other person required is based. It makes it very prone to error.

[techsupport]

You could try putting a new line or two on your invoices

 

something like this

 

 

L1)excess credit charge 10% of total amount will be charged if stated payment terms are not met.

 

L2)simple! save money, pay on time.

 

We have been doing this for years and it does encourage bean counters to pay up within terms.

sometimes we have been sent considerable sums of excess credit charges by very large companies.

 

Aways agree terms in advance in writing is best.

 

Always put these terms on your bills

 

Always provide bank details so the bc can use bacs etc.

 

As for my freelancers, most get paid within 1 or 2 days of submitting their bills.

 

Hope this might help.

[David Lee]

You should really follow the late payments of debt act. Excess credit charge of 10% may not be legit cf the case of banks at the moment charging for unauthorised overdrafts. Also, the late payments act states that the interest is accruing every day and that a one off compensation charge will is become due. Yours is just a blanket 10% whether it is a week late or a year late.

 

The recommended wording is:

 

"We understand and will exercise our statutory right to claim interest and compensation for debt recovery costs under the late payment legislation if we are not paid according to agreed credit terms."

 

This does not have to be on the invoice as the act is statutory but it may help to remind people that you are aware of the act and will use it if necessary.

 

More info here

[Doug Siddons]

Hey all

 

I have an outstanding invoice that is going to become late payment tomorrow, my question is does the cheque have to arrive tomorrow or do funds have to be in my account tomorrow?

 

Cheers

 

oli

 

 

My response to this would be the usual it depends... If its a shed load of money I would have chased it politely before the final due date to find out if there is a problem and respond accordingly, if its a gig payment then provided I get it within a reasonable time ( that bits up to you ) of the due date I'm reasonablly happy. I've just got in from a gig where I expected to be paid for this one and the last one (tuesday) tonight in cash, turns out I've got to invoice two different companies for gigs in the same venue booked by the same promoter, one of which will be paid within 14 days and one "straightaway". The promoter gives me regular work and I know he's going to pay so no problem , the other is a very well funded company who I would expect to swing the lead but will pay in the end so again no problem. The only fly in the ointment was the cash was going to be used for my annual bender which starts on saturday and alternative plans have to be made :)