Having problems getting money from customers

[jojo75]

Hi There
Just wondering if anyone can shed light on this.
We are a decorating co. who received an order for some work from a PLC company. We completed the work they are happy and have given us more work but we are still waiting for payment for the first job which finished in May.
They are telling us that they have not received their money yet and as soon as they do.........
Can we start to charge interest for the monies owed to us. At the mo is about �12k + Vat
Thank you

[cassa333]

What was in the contract you had with them?

[jojo75]

HI There,
We don't have a contract as such, we just work on the term of an original order from them, Then invoice them when complete with "28 days payment from date of invoice" on the paperwork.

[Maypole]

Hi jojo

Yes if the plc is in England and Wales you can charge interest and Ive found this useful in getting debts settled in the past. Dont necessarily expect to get your interest paid (and then that will be your decision as to pursue that) but it may well help speed up the process on the original invoice.
My understanding is that 'paid when paid' although commonly used is not legitimate but Im no lawyer.
Send in a new invoice for the interest plus the fixed administration fee of �100. The interest is calclulated at base rate at time of invoice +8% on the VAT inclusive amount.
So.....�12k + VAT = �14100. Base rate in May was 5.5% plus 8% is 13.5% on �14100 is �1903.50 over the year or �5.22 per day. Youll need to work out the date on which the debt fell due to calculate the proportion of the year but from end of June will be in the region of 80 days which comes to �427.64. Add the �100 and invoice for �527.64 (no VAT charged on this new invoice).
This is all in the Late Payment fo Commercial Debt (Interest) Act 1998 - the interest rates and fixed fees are all laid out.
Highlight on the invoice that interest is accruing at �5.22 per day and good luck with it.

[Maypole]

Here is a link and it has an interest calculator
http://www.payontime.co.uk/legislation/legisla tion_main.html

[lawsanass]

Well jojo, thats the best answer ive seen on here for ages, everything you needed to know....brilliant Maypole.

[Skyline D]

"Well jojo, thats the best answer ive seen on here for ages, everything you needed to know....brilliant Maypole"

Apart from the fact that if he's going to include a �100 "Admin Fee" in the bill then they DO have to charge VAT on it at �17.50. It's a service. The interest is exempt from VAT, the admin fee isn't.