Following an e-group discussion, here are some example late payment terms shared by members…
- “Invoices are payable within fourteen days of invoice date and, unless otherwise stated in writing, quotations are given exclusive of VAT. The Company will be entitled to charge interest on all amounts outstanding beyond 30 days at the rate of 4% above the current XXXX (insert name of your bank) base rate. Where a solicitor has to be instructed to recover payment, all proper solicitor and client charges are payable by the Client in addition to the party and party costs of any Court Proceedings.”
- You’re also entitled to a “debt collection” charge (varies according to the amount). A trick sometimes used is to send a statement a while after the invoice becomes overdue, showing the number of days overdue and the interest charged to date, along with the debt collection charge, and a statement along the lines of “interest will continue to be charged at the statutory rate until payment is made in full”.
- “The agreed fee should be paid within 15 days of the invoice date. In line with the Late Payment of Commercial Debts (Interest) Act 1998 as supplemented by the Late Payment of Commercial Debts Regulations 2002 (see https://webarchive.nationalarchives.gov.uk/20121212135622/https://www.bis.gov.uk/files/file37581.pdf), late payment may incur interest at the rate of 8% above the Fixed Reference Rate in force at the time. The Bank of England Base Rate at 31 December will be the Fixed Reference Rate for debts that become overdue during the period 1 January to 30 June. The Bank of England Base Rate at 30 June will be the Fixed Reference Rate for debts that become overdue during the period 1 July to 31 December.”
The interest rate and fees applicable are defined in law, and so no client can refuse to pay…although there is a risk that the client will not place any future business with you.