Late payment via invoice

[dee_84]

Hi, Sorry, I know this is boring, but I'm not really sure where I stand on this one.

 

Basically I was doing a show for a company who I knew where slow to pay, so I invoiced them a month in advance with the due date of the invoice on the last day of work. I had to have 2 days off during this period where I got somebody to cover me, and he invoiced me. During the course of the month 3 of the shows got cut, one of which I got less than 24 hours notice for. These dates got cut 5 days before the due date of the invoice.

 

I sent them and updated invoice (including a payment for the show I had less than 24 hours notice for) 2 days after I was told the shows were cancelled. Thanks to being busy working for this company, I didn't have time to do it sooner.

 

I called them on the due date to see if there were any problems and if I was going to get paid because I needed the money. They said they'd call back, but didn't

 

A week later I still hadn't been paid, and I emailed them asking what the problem was and sent them an invoice reminder. The response I got was this:

 

"Company policy is to pay in arrears, after work has been done. Your invoice issued on 29^th June 2012 was incorrect in the event. You have sent a revised invoice today which, again, is incorrect."

 

After this I emailed them an invoice with out the cancelled show on it, I don't want an argument with them, I just want to be paid.

 

Another week has gone by, still nothing. Today I found out that the guy who covered the 2 days I couldn't do has called them up and invoiced them separately (his invoice to me is not yet overdue), which means that my newly revised invoice is once again incorrect and they haven't told me. Also, everybody else who worked on the show has now been paid.

 

Basically, dose anybody know if the original due of my invoice still stands and the reason it was correction was that they changed the terms? I know it's generally accepted that if you're not given 24 hours notice of a shift being cancelled you should still be paid for it, but is a company legally obliged to do so? Also, am I allowed to charge them interest, or an admin fee if I didn't originally state on my first invoice that I would do so if payment was late?

 

I would got to the union for advice, but I pay my subs yearly, and they're due now, but I can't pay them because these guys haven't paid!

[rossmck]

Your contract at the time of being instructed to do the work should have agreed terms for the invoice (usually 30 days, in some cases 14) from date of invoice. If there isn't one, or you weren't made aware of any, my understanding is your terms apply so you can mark it as "Payment due on receipt" and it becomes overdue if they don't pay immediately, but as a courtesy I would suggest 14 day terms apply where nothing else has been agreed. This contract should also include cancellation terms, and how much notice is required.

 

Personally I'd say that if you aren't given a reasonable notice period (seen terms from 24-72 hours) then they should still be paying you because that's time you *could* have been working for someone else and weren't able to as you had been contracted to this company.

 

Regarding 'admin fees' this is quite shaky ground, what you're definitely allowed to charge (and are legally entitled to!) is statutory interest pursuant to the Late Payment of Commercial Debts Act 1998 which is 8% above the reference rate (currently 0.5%, so 8.5% pa) this was amended by European Directive 2000/35/EC which also entitles you to charge £40 for unpaid invoices up to £1000 and £70 for any invoices over £1000 that are not paid on time.

 

 

[paulears]

Your real problem is that unless they actually agreed to be invoiced in advance, which their response indicates they weren't, that you are at the mercy of their usual terms. The person who has invoiced them directly really messes things up, and you need to have stern words with this person as their services should have been through you - why did they invoice direct? After all, you could have been adding on a percentage for managing the deal?

 

However - any attempt you make to resolve this will sour your own relationship - if the other person has submitted an invoice and done it professionally, and you are a pain, then who will they go to next time? If you are self-employed I'm afraid you have to live with 30 day terms, and frankly - if you cannot float the deal with your own funds, then you're not really self-employed, because cash flow is part and parcel of running a business and you seem to be treating it as wages? When you are in business, then when your suppliers invoice you, they have terms of business. You should too! Sadly, in today's business climate nobody can expect immediate payment from a larger company - it can happen but isn't very common. The people that work for me in a similar way often have quicker payment terms as part of the deal. The ones who invoice me know they will get paid within the week, even though I frequently wait up to 40 days. If you do this kind of thing, you need to build up a cash buffer you can use to float the payments. Issuing 3 versions of an invoice hardly projects a good impression. I know they ought to pay quickly, but you tried to cheat their system by invoicing in advance, but messed up the process.

 

As I see it, you now need to invoice for the revised correct amount, and the 30 days will start again. The EU allowed penalty can only kick in after 30 days, and I'd advise caution, because if your invoice was duff twice, then they simply aren't going to pay it early, or perhaps even on time - and if you are not very careful, your services won't be wanted again.

 

You knew they were slow payers, so if you cannot deal with this, the correct system would have been to decline the job, or perhaps increase your price to cover the delay - NOT to try to be crafty. Very few firms would accept an invoice in advance without prior negotiation.

 

Frankly - you're stuffed.

[GR1]

I agree with Paul ... you are stuffed and it looks as though you are responsible.

 

Normally unless otherwise agreed you invoice on completion of a job for payment within 30 days. I've been doing this for 30 years and during that time I've negotiated staged payments for long jobs or where I have supplied a lot of materials and also advance payment of expenses to limit my exposure to the job. If you try to wing it by punting an invoice before completion you open up the prospect of putting everyones back up and this could well have happened. Payment of the invoice won't be considered until it has been signed off by the project manager and that won't happen until the end of the invoice period. You also need to understand that a lot of production companies are too small to pay all the invoices until they get paid themselves so what you see as slow payment may not be down to them. It is very important to remember that this is a business transaction so you need to understand all the terms and conditions and live within them - it is also a personal transaction so if you had asked the project manager if there was any chance of a part payment during the job they may have agreed if they liked you and wanted to keep you.

 

The lesson is : do not try to wing it with the financial types - understand the contract and be kind to your client otherwise you lose them !

 

Forget any legalities - the fact that everyone else who accepted the system got paid shows them to be good payers.

[paulears]

Despite the legislation a colleague of mine tells me Whitbreads have a 90 day payment policy - and this really stretches things - especially as he has an agent, so he doesn't get his until the agent has deducted commission and passed the remainder on. Has anyone had this 90 days confirmed? I don't know how they get away with it if true?

[timsabre]

Despite the legislation a colleague of mine tells me Whitbreads have a 90 day payment policy - and this really stretches things - especially as he has an agent, so he doesn't get his until the agent has deducted commission and passed the remainder on. Has anyone had this 90 days confirmed? I don't know how they get away with it if true?

 

What legislation is that? I have a couple of "big dumb company" type customers who will only pay on 90 days. You just have to decide if the job is worth it or not - we add a bit on to the cost to cover the overdraft fees. It would be impossible if everyone paid us on 90 days though.

[paulears]

The legislation seems pretty unknown, but is now an EU directive after being a UK law for quite a while

link to explantion here

In essence it seems that after 30 days you can claim interest at above the bank rate - I'm not sure that will endear you with a valuable client - but the option is there.

[TomM]

I would assume the law does not override the terms of the contract though - so if you've "agreed" 90 days, then it's 90 days before the payment is late, and interest due.

 

Of course, "agreed" is used loosely, but as long as they've notified you in advance and you've not agreed otherwise...

 

(IANAL)

[kerry davies]

Lots of info at the Prompt Payment Code and BERR late payment websites but if you agree to 90 days then 90 days it is. It might just be worth mentioning the "Void "grossly unfair" contractual terms" element of the legislation since you can not only get interest but compensation sums. Concentrates accountants minds wonderfully does the mention of "penalty clauses." ;)

 

Whatever the rights and wrongs or the cultural norms, invoicing clients without a tacit agreement on terms and conditions is naive, at the least. It is not called a business relationship for nothing, one has to relate.

[paulears]

I can't provide any absolute facts on this, but the story I was told was of a company with this 90 day terms procedure that the suppliers were unaware of, when they supplied seating. Once informed of the 90- day rule, they went and collected their seating - which on their terms and conditions was clearly shown that title was not transferred until payment received in full - which it wasn't.

[Jivemaster]

Here is where you accepting their order with T&Cs or them accepting your contract with your T&Cs comes to the fore. If you accept their work and their order for that work, then you accept the T&Cs that come with it including invoicing conditions and payment terms. If they accept your contract to supply goods of services then your T&Cs apply but they still will only pay on their terms even when they have agreed to your terms.

 

Invoicing for work done menns that you will wait til they want to pay you. It's NOT a salary coming in on the 29th.

 

Be even more cautious of open orders! One order from a major Co for my then employer was payable on completion BUT the client kept adding more to the order so it dragged on for a LONG while til it was closed for processing and payment.

[dee_84]

Thanks guys. I would have waited until the job had finished but it was an on going job that finished in December. I didn't know they were late payers until after I put my 1st invoice in, which they paid late. I wasn't trying to be crafty, I was actually trying to save them work by not invoicing them weekly as they were clearly stretched (and they didn't object to this at the time).

 

I'm really not too bothered about keeping my relationship with this company, and as for it being a small production company, they've messed us (techs and cast) around in a lot of other ways too, including cancelling the show completely with less than 24 hours notice via email. The company owned by a multimillionaire with over 30 years experience of working in the music business. They themselves told us nothing about T&C of invoicing when we asked about it, we were simply told "email Lucy in the office with it".

 

Yes, it was naive of me (and the rest of the techs), to accept the job with out a contract or knowing any of the companies T&C, any thing we asked them about it always got vague answers. I know I need to be more assertive on this kind of thing.

[ImagineerTom]

If they didn't properly notify you of their T&C's and or broke your T&C's then, with a half decent solicitor you'd probably have a good case against them. However this will do nothing to sort the cash-flow issue now as such matters take months or even years to actually resolve (we won a case against a supplier who changed T&C's mid contract costing us a fortune, it was a cut-n-dry case that took 14 months to actually get to court and so far 8months to get them to pay the judegment), it will get very expensive (£35k of legal costs for an initial claim of £4k) and so will be way more hassle than it's worth.

 

 

 

 

In future, talk to the company and expressly ask them what their payment procedure and payment terms are then follow them to the letter. Also speak with other contractors and find out what that company is like when it comes to payment. Finally, make sure you have a cast iron, well written Terms & Conditions (as a business you're legally obligated to have some that you issue to all customers) and make sure you add a clearly defined set of penalties for late payment and enforcement. This more professional approach will spur some companies in to paying on time and if you do have to go to court will make it much easier for you to win.

 

 

[zonino]

Finally, make sure you have a cast iron, well written Terms & Conditions (as a business you're legally obligated to have some that you issue to all customers) and make sure you add a clearly defined set of penalties for late payment and enforcement. This more professional approach will spur some companies in to paying on time and if you do have to go to court will make it much easier for you to win.

 

under what legislation are you legally obligated to have T&Cs that you issue to every single customer? wouldn't that mean that most corner shops are failing in their obligations? (I don't normally get a reciept, and if I do it doesn't have any T&Cs printed on the back of it)

 

thats not to say you shouldn't have T&Cs, but you need to make sure that you bring it to their attention and don't sign anything that would bind you to their T&Cs - NORMALLY the last signed/agreed thing would be the valid one.

 

Also, you need to agree them up front - putting T&Cs on the invoice is rather useless as you are trying to change the terms of the contract after the agreement has been accepted - you've already done the work! (as you should be invoicing after completion of the job)

[ImagineerTom]

It's incorporated across various acts but if you're involved in any kind of distance selling (website, email, telephone) or ratify or form a contract across any of those mediums you're required to include a host of company information (full trading name, address's, VAT details, professional memberships) and provide your customer with a copy of your T&Cs right at the start. There's less strict requirements for pure business-to-business transactions but it is good practise to do all of this anyway. There's also a grey area as to exactly where someone stops being a consumer and starts being a business.

On this forum where a significant chunk of the posters regularly supply "consumers" - am dram groups, weddings, local bands and the vast majority of posters conduct the bulk of their business via email/website/phone I'd say that most people reading this thread are required to issue this info.

Face to face retail transactions don't have quite such onerous terms placed on them