Terms of payment

[Mustang]

In my contract, I make no reference to the terms of payment other than the standard reference to "one month in arrears". In some ways I wish it could be more frequent (and in advance!) but ho hum I was happy to settle with that since it seemed to be the norm.

Now that the contract is underway, I have realised that the Company is slow to pay. In view of this, when I issued my first 2 invoices I stated on the invoices that "Payment was due within 14 days" in order to improve my own cash flow. The company have paid my first invoice albeit about 7 days outside of the 14 days. They have also come back and said that my next invoices should indicate 30 days as that is their standard terms of payment.

Basically, who controls the payment terms? If it is not specified in the contract, can they insist on me putting terms of payment that I am not happy with? What action (if any) can I take if they continue to pay my invoices late?

Any other comments (polite ones! :b ) that you Veterans out there might have......?!!

[Cojak]

Yeah, charge them interest at 1% per day outside your stated limit (this needs to go on the invoice though...)

[planetit]

But you signed a contract with 1 month payment terms? If you want to change that to 14 days you will have to negotiate with them.

[Mustang]

Clarififcation

The one month in the contract refers to the frequency that I can invoice them. The 14 days on the invoice refers to the speed at which I want them to pay.

At least that's my interpretation of the statements. Please let me know if I am wrong.

[planetit]

Re: Clarififcation

I don’t know, as I haven’t seen the contract.

I’m not an expert, but I’d have though it would be very difficult to force them to accept payment terms of less than 30 days. They have already rejected your 14 day terms.

I don't see how you can force them to accept extra terms which were not in the contract. You will have to persuade them.

[ASB]

Mustang,

You need to look at the late payment of commerical debts legislation. This gives you the right to charge interest on late payments.

I doubt you will get anywhere though since it would appear from your initial post that you have explicit 30 day payment terms from presentation of invoice.

You seem to interpret this as an invoicing frequency and the contract is silent on payment terms, this could be the case but is not how to interpret "one month in arrears".

If the contract is silent on payment terms then the default payment terms should be enforced. You can find this is said legislation, but I think it's 30 days.

[Mustang]

The contract wording is: -

"The Comany shall pay the Supplier every month in arrears on production of signed timesheets with supporting invoices".

There are other clauses relating to BACS, timesheets, etc but nothing specifically mentioning payment terms.

I will take this up with my accountant/solicitor but I had no idea that this statement would allow them to assume they would not pay me before 30 days was up. >: You live and learn.....!!

Thanks for the feedback todate - any other thoughts always welcome!

[Mustang]

Solved!

For closure on this issue that any fellow newbies might find useful, go to

www.businesslink.gov.uk

I went there after doing a search on google for "payment terms".

The bottom line is that one of the previous replies posted was spot on. If you dont specify payment terms in the contract, your client has the right to impose 30 day payment terms. I guess I learnt the hard way........!!

I will ensure that my 'standard contract' is ammended......now!!

[nobody here but us chickens]

Re: Solved!

consider yourself lucky - I regularly deal with companies that have standard terms stating 60 or even 90 days.

Always read the small print on the purchase order and request a copy of their full T&C if it is refered to.