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Post questions here regarding the use of the Late Payment Legislation

Constant late payer

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13 years 2 weeks ago #399 by jclarkco@btinternet.com
Constant late payer was created by jclarkco@btinternet.com
Hi
I have a customer who is CONSTANTLY late with payment, even though I have threatened them with the Late Payment Legislation.
At present, they owe my company £11K spread over 5 invoices.
Do I need to calculate Interest and compensation on every invoice, and how do I work out how much the daily interest rate is please

Many Thanks

Debbie

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13 years 2 weeks ago #401 by David J
Replied by David J on topic Re:Constant late payer
Hello Debbie

You can certainly charge interest on each invoice. For compensation you have to use your discretion. The legislation states that you can charge 'reasonable compensation'.

For example if you had 5 invoices at between £20 to £25.00 each and you charged £40.00 compensation on each invoice, that could be seen as unreasonable.

For your invoices of £11,000 I think it would be seen as fair to charge compensation on each one. Some users who have posted regarding this subject have been successful charging compensation on each invoice.

Keep in mind that you can also claim interest and compensation on invoices that have been paid, but were paid late. You can do this retrospectively going back six years (five years in Scotland).

To calculate interest and compensation you can use the free statutory interest calculator .

I also suggest that you browse the users guide to get an idea of what you can claim and how to go about it.

I hope that helps

Regards

David

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13 years 2 weeks ago #402 by jclarkco@btinternet.com
Replied by jclarkco@btinternet.com on topic Re: Constant late payer
Oh David,
Thank you. I feel like I am banging my head against a brick wall with this customer! Annoying when I know they pay ProForma on container loads from Asia!
Debbie

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13 years 2 weeks ago #403 by Leigh Harris
Replied by Leigh Harris on topic Re: Constant late payer
In his response to Deborah's initial post David states "For example if you had 5 invoices at between £20 to £25.00 each and you charged £40.00 compensation on each invoice, that would be seen as unreasonable"

On what basis can it be said that claiming a statutory entitlement can be seen as unreasonable. As per Section 5A the compensation for a debt of £20 is £40.

Since the debt is created when the invoice is paid late the right to statutory interest is estabished and the right to compensation follows.

What is unreasonable about that?

Why would I want to have the means to calculate statutory entitlements only to be told by the site moderator that if I pursue the amount calculated that will be unreasonable. I'm confused.

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13 years 5 days ago #412 by Safe_UK
Replied by Safe_UK on topic Re: Constant late payer
Leigh Harris wrote:

In his response to Deborah's initial post David states "For example if you had 5 invoices at between £20 to £25.00 each and you charged £40.00 compensation on each invoice, that would be seen as unreasonable"

On what basis can it be said that claiming a statutory entitlement can be seen as unreasonable. As per Section 5A the compensation for a debt of £20 is £40.

Since the debt is created when the invoice is paid late the right to statutory interest is estabished and the right to compensation follows.

What is unreasonable about that?

Why would I want to have the means to calculate statutory entitlements only to be told by the site moderator that if I pursue the amount calculated that will be unreasonable. I'm confused.


To be fair to David, he actually said:

David Tyler wrote:


For example if you had 5 invoices at between £20 to £25.00 each and you charged £40.00 compensation on each invoice, that could be seen as unreasonable.

For your invoices of £11,000 I think it would be seen as fair to charge compensation on each one.

David


Could be seen is they key phrase. If you proceed on the basis as suggested and find yourself in court to recover the late payment charges a judge may well decide the charge £40 on each £25 invoice is unreasonable.

When chasing multiple overdue invoices for client's we tend to err on the side of caution and issue one charge for fixed costs on the total value of the invoices, plus interest calculated on each invoice individually.

With those calculations we have never had any issue when enforcing the legislation in the courts.

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