Late payment? It’s just not good enough!

Most of my clients pay me by direct debit on a monthly contract but I recently took on a speaking engagement at short notice to help somebody out. It was a substantial fee but there wasn’t time to take a deposit so I squeezed in 4 days of preparation, rehearsal, travel, and delivery before I finally invoiced the full amount.

When the due date passed I sent a polite automated reminder from Xero and then rang the organiser in case there was a problem with the invoice. Just as well because it turned out the bookkeeper had paid the wrong person!

Mistakes happen and the other supplier who received my payment had immediately notified my customer. But the company hadn’t bothered to contact me to explain or to offer any apology.

This made me ‘a bit grumpy’ but I got even grumpier when I had to keep chasing each week. This was definitely not a business that I wanted to work with again. I always pay my own suppliers promptly as they are usually small businesses like mine.

So, as the law allows, I raised an invoice for interest on late payment of 8% over base rate plus £70 debt collection charge. Eventually the original invoice was paid and, after further chasing, the penalty invoices were paid too.

Even if people know that they are entitled to claim this interest and debt collection charge not many people actually bother. And many cancel the interest once the main invoice is paid. Why?

It is important to ensure that small businesses are paid promptly and part of that is making it more painful for the defaulters than for the unpaid victims. Let’s all make sure that we charge interest and collection fees so that we gradually get larger businesses to comply with their agreed payment terms.

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