You’ve worked hard to win a new customer. You’ve worked hard to deliver a quality product/service for the customer. But now the customer is making you work hard to get your invoice paid. That can’t be right, can it? It isn’t right, but there’s nothing you can do about it is there? Wrong. There is! You have rights and you shouldn’t be afraid to exercise them in order to get paid. You’re (probably) not running a charity. You have bills to pay and employees who have families to support; so getting your money is really important. And the government know this so they’ve put in place mechanisms in order to support you in getting paid.
Payment terms It’s always best to have your own payment terms laid out because these will more accurately reflect the needs of your business and you can set these to be whatever you need. 7 days, 30 days, or 100 days. It’s up to you. However, if you haven’t explicitly given terms to your customer then the default is 30 days and it’s within 30 days that they have to pay you.
Charging interest Once the invoice becomes overdue then you are perfectly entitled to charge interest on the amount owing. This would be either your own rate of interest if you’ve included it within your terms, or it could be the statutory rate of interest, which is 8% PLUS the Bank of England base rate for business to business transactions. Don’t be afraid to do this, because it’s your money that they’re stopping you accessing. You could be gaining interest on that yourself if it was in the bank, or you could be investing it in obtaining further work, and you can’t until they pay you.
Statutory demands If all else fails, anyone who is owed money can make a statutory demand and you don’t need a solicitor to help you. Once the demand is received by the company owing the money, they have 21 days to either pay the debt or reach a payment agreement with you. If this isn’t forthcoming then you can start a winding up order against the company. But hopefully all our customers will pay on time and we don’t need to worry about any of this!