Late Payments

Late payers are never good for business. They can cause huge problems for companies cash flow and for the self employed it can make the difference between you being able to pay your mortgage or not.

Late payment legislation for business to business transactions was updated in March 2013 to implement a European Directive to simplify the procedures across the EU. This legislation is not just for Limited companies, it is for all businesses so here’s what you can do.

Payment Terms

It is always best practice to agree payment terms with a client before commencing work, however this is not always possible and now you don’t have to.

Unless agreed otherwise a payment is late if not paid after 60 days for business to business or 30 days for business to public sector transactions.

Charging Interest on Late Payments

You can charge statutory interest at 8% above the Bank of England base rate. If the debt becomes late in the 1^st 6 months of the year you use the base rate issued on 31^st December, the 2^nd 6 months of the year use the base rate issued at 30^th June. It’s currently 0.5% so you can charge 8.5%.

Calculating Late Payment Interest

Use the following formula:

Debt x Interest rate % x number of days late ÷ 365 =

Additional Charges

Fixed fees can be added to the debt

•         £40 for debts up to £999.99
•         £70 for debts from £1000 to £9999.99
•         £100 for debts of £10k and above

If your costs for chasing your payment are more than the fixed fees above, you can claim the extra expense as ‘reasonable costs’ so you should never be out of pocket.

References & more detailed guidance can be found:

• Directive 2011/7/EU on combating late payment in commercial transactions.
• Dept for Business Innovation and Skills.
• Base Rates found on Bank of England Website.

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My Office

Following on from my previous blogs ‘Working from home’ and ‘What your desk says about you’, it occurred to me that none of my 170 clients have ever seen my office so here is a guided tour.

Firstly my office takes over 2 rooms; one has filing cabinets and storage of work to be done and work to be collected.

The other is where the many, many hours of work are done.

There are 2 workstations, 2 laptops, a Mac, 2 printers, shelving, stationery cupboard, filing trays, white board, pin board, Bose speaker doc, telephone, shredder, binder and all the necessary stationery. All very usual and boring.

However, I have some more interesting objects in the office to make it more personal to me.

A canvas of Moto GP Champion Jorge Lorenzo – I’m a big fan.

On the shelf you may have spotted there is an Ice Hockey goalie mask – a present from my husband. This one is from NHL team Florida Panthers (not my team but they are hard to come by) and it actually has blood inside it. I also have 2 ice hockey pucks – they make great paper weights.

Look see I really am qualified and licenced to practice!

My stapler is the best stapler ever, I had it for years at my last place of work and loved it so much that they let me keep it when I left 6 years ago and it’s still going strong. I don’t know what I’d do if it broke.

My paperclips are held in a little cake box from The Bulldog – one of those ‘special’ cafes in Amsterdam and yes the cake was ‘special’ too. My husband and I thought we would be brave and try one. So sitting on the edge of a canal in the red light district, whilst watching the numerous stag parties go by, we split the tiny cake in half and ate half each, then waited ….. and waited ……and, nothing!! It was probably just an overpriced sponge cake.

My husband and son stick stickers on everything – I hate stickers, the side of my printer is the only place I allow them on my stuff and they have to meet the criteria of being pretty/cute/girly bike related stickers.

Finally, my all important calculator. I’ve had it from when I was studying accountancy so I estimate it to be at least 15 years old. Pretty much all of the numbers have disappeared from the keys and I never even realised until my son tried to use it to do his maths homework and he would ask “Where’s the 3”, “where’s the plus”, and I would tell him “where they’ve always been” – no wonder he done so badly in maths.

 

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