Can I Charge?
Yes. This piece of insight will allow you to learn the rules and practices on how to charge for your customers on late or unpaid invoices to ensure that you will learn better ways to deal with your difficult customers.
Things to get right before charging for being late.
BVS advice you to check whether you’ve got following things right to make sure you are not a part for the client’s delay in the invoices.
- Agree on strict deadlines for payment (as far as it is practical and suitable)
- Clearly agree on penalty or late payment fee that could be applicable
- Widely used practice is 30days after the goods/ services being supplied
- Give your client all information they need to pay you.
- Ensure your invoice has reached the right person
If all these things are perfect and still the payment is not received at the deadline for payment, following guideline will help you on how to charge penalties.
What are the penalty rates?
Following cost components can be added as late fees for late/non paid invoices.
- 8% of interest above the Bank of England base rate.
Assume that Bank of England base rate is 2%, the fee you can charge the client will 10%
- Fixed fees
Depending on the value of the invoice amount which will be charged are as follows.
- £40 for debts up to £999.99
- £70 from £1,000 to £9,999.99
- £100 for £10,000 and above.
Any reasonable cost that you had to incur in chasing and following up the invoices could be also claimed from the pocket of your non responsive customer.