Late payment of bigger companies to smaller ones

[Waldo]

Hi,

 

I've been having difficulty getting payment from a publisher. Payment was due on 30/1/2015, but still no sign of the money (not a massive sum, just over £900).

 

They're a company based in the England.

 

I've just mailed them, saying I expect payment by the end of the week, or I'll be adding interested and compensation in line with late payment law; and that I'll also be considering the small claims court.

 

Is that a sensible approach for me to take? (they haven't been too responsive to any other approach I've tried).

 

Bit of pain for a smaller company to have to deal with this kind of crap.

 

Would be grateful for any general advice on the matter,

Thanks,

[L00b]

I've just mailed them, saying I expect payment by the end of the week, or I'll be adding interested and compensation in line with late payment law;

Is that part of your T&Cs? And if so, has your client constructive notice of your T&Cs (do they have a copy)?

and that I'll also be considering the small claims court.

I suggest that you keep that for the next (and final) payment reminder, which you could send as a 'final letter before action'.

 

Again just a suggestion: less of the "rah-rah-rah" with the 1st reminder (to keep on the right side of aggressiveness, if you'd like repeat business), a couple of "rah-rahs" with the 2nd reminder ("now you're taking the proverbial, don't push me to go to enforcement"), then debt recovery (solicitors or small claim court, add interests and your (or the solicitor's) costs of enforcement).

 

Depending on the relative balance of power in the commercial circumstances, put them on (full or partial) payment upfront for the next job, as well.

Bit of pain for a smaller company to have to deal with this kind of crap.

Unavoidable, better you factor it into your costs of doing business. Edited March 2, 2015 by L00b

[Waldo]

Thanks L00b.

 

Our contract states payment to be made within 30 days of the end of the month in which they receive an invoice. There is no provision in contract for late payment penalties. I thought it was a standard thing, applicable to commercial debt?

 

http://late-payment-law.co.uk/faq.html

 

I could well be wrong of course.

 

Yep, with the small claims court, that's further down the line of course, if I need to escalate the matter. I mentioned it, as I felt it would increase my chance of getting paid, sooner.

 

I'm not that bothered if the relationship sours; in fact, they'd need to offer me very favourable terms (and a large advance) for me to even consider using them to publish anything else of mine in the future.

 

Thanks again,

[Chez2]

When we send out quotes we state that the prices are discounted for payment within 30 days. Payment received 31-60 days be receive the 10% extra charge charge. Anything over this will be passed to a third part debt collector. We mention their basic additional charges and interest etc being passed to the customer/debtor.

 

If someone tells me their is going to be a short delay in payment I will be more lenient. Some repeat offenders just get a supplementary invoice with the 10% surcharge on.

 

I have gone down small claims court once and was amazed how easy it was.

 

We email our invoices now so people can't say they haven't received them.

[JFKvsNixon]

I also depends how important the company is to your business.

 

This happens to my brother all the time, but if he hassled the other businesses, which are almost always big multi-national companies, too much they'd go elsewhere. They always pay, but they always drag their heels paying as well and he has to accept it as a price of doing business with them.

 

So it's all important to consider the relationships between you and the other party as well.

[L00b]

Our contract states payment to be made within 30 days of the end of the month in which they receive an invoice.

OK, so potentially up to 60-ish days (e.g. invoice on 01/01/xx, pay by 28/02/xx), which is quite generous (IMHO).

There is no provision in contract for late payment penalties.

I'd suggest that you put some in, even if in very simple terms as highlighted by Chez2 (pay within interval, interest accrues at X% on late payment when overdue for a period of e.g. 30 days, debt gets referred for enforcement after that, with customer to bear all enforcement costs).

 

That would give you a strong(er), contractual basis on which to base your claim against the defaulter(s).

I thought it was a standard thing, applicable to commercial debt?

 

http://late-payment-law.co.uk/faq.html

These one-liners, whilst not wrong as a matter of principle, oversimplify matters a great deal.

 

In practice, the legal situations that arise when dealing with late (or non-) payment can vary a lot, between one case involving one customer and another case involving another customer, depending on the facts.

Yep, with the small claims court, that's further down the line of course, if I need to escalate the matter. I mentioned it, as I felt it would increase my chance of getting paid, sooner.

It's a double edged-sword, though: you should only mention it if you are definitely going to use it (unless they pay of course) and it's highly likely to sour the relationship regardless.

 

We use substantially the same approach as Chez2, but let others (our solicitors) threaten Court proceedings

 

After all that, it's a question of business development and steering: we focus on servicing solvent SMEs (and bigger) but we don't like to turn private client or other (likely-) under-funded work away, so we have 'variable terms' implemented as varying credit limits and payment terms (from payment on account for everything before we lift a finger for highest-risk clients, to payment at 60 days with a credit limit into £-thousands for blue chip clients) and 'auto-upgrades' based on good behaviour (pay your bills on time over period X, earn extra days for payment and/or a higher credit limit).

 

If a high-risk client is unhappy right from the off with our proposed pay-everything-upfront terms, we don't lose much sleep over their running a high-risk tab with the competition instead

Edited March 2, 2015 by L00b

[Chez2]

I also depends how important the company is to your business.

 

This happens to my brother all the time, but if he hassled the other businesses, which are almost always big multi-national companies, too much they'd go elsewhere. They always pay, but they always drag their heels paying as well and he has to accept it as a price of doing business with them.

 

So it's all important to consider the relationships between you and the other party as well.

 

If you give great service and keep your contact informed it doesn't matter. Make your prices for each set of payment terms clear on the quote. We have kept customers who are on pro forma. Its not just the large multi-national companies that pay late. I am happy to say that most of our customers pay their invoices on time. To some accounts departments its just a game, some might have cash flow problems.

[Cyclone]

Is that part of your T&Cs? And if so, has your client constructive notice of your T&Cs (do they have a copy)?

It's the law, 30 days late allows for a small late payment charge to be added.

I suggest that you keep that for the next (and final) payment reminder, which you could send as a 'final letter before action'.

 

Again just a suggestion: less of the "rah-rah-rah" with the 1st reminder (to keep on the right side of aggressiveness, if you'd like repeat business), a couple of "rah-rahs" with the 2nd reminder ("now you're taking the proverbial, don't push me to go to enforcement"), then debt recovery (solicitors or small claim court, add interests and your (or the solicitor's) costs of enforcement).

 

Depending on the relative balance of power in the commercial circumstances, put them on (full or partial) payment upfront for the next job, as well.

Unavoidable, better you factor it into your costs of doing business.

 

All seems like good advice. The one time I had to chase an invoice I got paid after a polite reminder by email.

[Chez2]

I find phone calls work better than letters. It also helps to keep a good relationship when you have a conversation with them. I only send letters if its going to be referred to a third party or small claims court. I have only needed to do this twice in six years. I have sent surcharges invoices out regularly and they do get paid.

[Waldo]

I've just heard back from my contact, who said payment was made on Friday, and so should be in my account tomorrow or Wednesday. I image that's either true, or I've prompted them to action and they've initiated a transfer this morning.

 

This is all pretty new for me, and I'm sure I could have handled things better. Escalating slowly and in a professional calm manner. Also, having well defined terms relating to late payment; for example, the 10% increase after 30 days think that Chez2 has seems very sensible.

 

Thanks again for all your very helpful advice.