|
- Member PM.Dip
- Practice Licence
- 84 posts
|
Hi all,
I'm STILL waiting for my level 2 computerised results and thought I'd be proactive and get my letters of engagement ready for my hundreds if not thousands of clients (i'm hoping!!).
What do you all charge if someone is late paying you?? Or more to the point what do you put in your terms regarding late payments??
Thank you
Angela
|
|
- Member PM.Dip
- Practice Licence
- 481 posts
|
I think if you are charging interest then it will likely be a one-off client as I can't see a client continuing when they have been charged interest.
According to the website below you'd also be entitled to claim debt recovery costs so I guess they'd need to be mentioned as well as I don't know if you can apply them at a later date (hence putting it in the letter of engagement).
https://payontime.co.uk/late-payment-legislation-interest-calculators
|
|
|
Hi Angela.
As you have a practice licence you can go into the members area on the left and then into "work place" there is a full page of guidance on preparing a letter of engagement on there and it makes quite interesting reading. As for the rate, if you search the forums (using the search button at the top) I remember there has been quite a lot said on this subject, which should give you quite a bit of information too. I think the general concensus was base rate plus 8%, but do have a look at the old posts to make sure.
|
|
|
Peasiesaid:
“I think if you are charging interest then it will likely be a one-off client as I can't see a client continuing when they have been charged interest. ”
With respect to Peasie, I would take the opposite view and ask if someone who was so late in paying is someone you would want as a long term client.
I don't think that a fair rate of interest would put a client off if the rest of the service is up to scratch. I personally charge 8% above base for late payments and have no issues charging that. If it encourages a poor paying client to pay slightly quicker in future the great, if they continue to pay late I would probably seek to end the relationship. Doing work and not being paid for it is actually worse than not having the work at all. I would also not think twice about taking someone to court for non payment.
Look at it this way, many of us offer credit control services to clients, don't our own businesses deserve the best credit control policy our training can provide?
Kris
Edited at 27 Oct 2011 11:31 AM GMT
|
|
|
In twelve years my total bad debts amount lesss than £750.
I have never charged interest to clients, I set up new clients to pay on the first or second day of attendance and at appropriate intervals after that and only allow longer term and trusted clients to pay monthly.
I also set up standing order payments for my fees.
My standard terms and conditions include the option for me to withdraw my services without notice if there is non payment of fees or regulatory issues.
Geoff
|
|
|
Hi Everyone,
This issue of late payment from Client has crossed my mind few days ago and did wonder whether to charge interest or not?
I would take Geoff option instead of charging interest for late payment.
Thanks Geoff, I will opt for similar withdrawal clause included in your terms and conditions.
Kind Regards,
Nathaliexxx
|
|
|
Dear Angela,
An interesting point. Speaking as a former regional manager for Asia for a Uk company selling capital equipment. Our contracts never mentioned late payments. Instead they contained a clause relating to payment terms which would vary depending on the nature and size in of the business. I don't see book keeping being so different in terms of the many different types of work you could be required to carry out.Rahter than a penalty clause for late payment why not adjust your payment terms accordingly.
I like the example by Geoff, keep it simple and safe. Your not putting off potential clients with late payment penalties and that is exactly the impression you will give just by mention of them.
Resorting to legal action involving the small claims courts is time consumimg, stressful, you would need a solicitor, maybe be awarded a percentage of your claim and then have the problem of enforcement . The only winner being your lawyer.
|
|
|
Timmsaid:
“Resorting to legal action involving the small claims courts is time consumimg, stressful, you would need a solicitor, maybe be awarded a percentage of your claim and then have the problem of enforcement . The only winner being your lawyer.”
Timm,
I disagree strongly with this last comment. You don't need a solicitor to go down the small claims route. It's simple and stress free. I have taken this path before many times and I would say 9 times out of 10 people will pay up before it even gets to court.
Kris
|
|
|
Kris
I wonder whether you are sending out the right message to other members?
For those who have no fear of the legal process - and you appear to be in that category - it is a simple and stress free exercise. Others may just want to get on with providing a service for which they are qualified.
However - what happens to your number 10 in the list? If they don't react then you have more costs involved in enforcement, assuming of course that enforcement is successful. If there is nothing available to recover then the costs are wasted.
If the action is defended - a day in court. Yes, it may only be an hour hearing but there is no guarantee that you will be heard first, add to this the travelling time and expenses. There are (in England at least) restrictions as to what a litigant in person can recover in respect of costs.
And of course a successfully defended action can result in costs being awarded against you.
You say that you have taken this path "many times". Is your business model correct? Would an engagement letter which sets out quite clearly at the outset make your life a lot better if you could stop work without notice?
Having worked in the legal profession since 1979 I know only too well the pitfalls of litigation - and it is very easy to fight a cause on principle and lose sight of the cause itself. And it is equally as easy to lose track of the time - which would otherwise be chargeable to more deserving clients.
If it works for you - good luck. I stick by my original opinion and any action via the legal system is a last resort.
|
|
- Member PM.Dip
- Practice Licence
- 84 posts
|
Thank you all for your opinions. I do like Geoff's approach and hadn't even thought of that as I was basing my ideas around the example engagement letter on this site.
But I think putting in interest charges etc would scare off new clients and I do not want that to happen.
However, I do feel it does need to be addressed, which I think Geoff does in a certain way that's not quite so harsh.
Everyone knows where they stand then.
Thanks again.
|
|
|
I haven’t looked at the ICB sample letter - having set up in business well before becoming a member.
I think that whatever approach is used it is a good idea to ensure that the wording is friendly.
So even if the straight interest approach is used, instead of "we will charge interest at 8% over base rate on any late payments etc"
perhaps " whilst we hope that it will not be necessary to do so, we reserve the right to charge etc"
and maybe include "we encourage clients to talk to us if there are any difficulties with payment of our fees so as to avoid any embarrassment which may arise"
Do also remember that if you want the option to withdraw your services without notice - your client may want to do the same!
So I always say to my clients that the contract is on one months notice and if they decide to terminate without notice they will be liable for my fees.
They may of course have an argument as to the standard of work but that then moves into another debate.
Geoff
|
|
|
Hi
I guess that any business has got to put up with some non payment - is there a standard percentage acknowledged as debt that will be written off? - i thought that this was around 5%.
I would also try to avoid going down the County Court small claims route - a strongly worded legal letter telling the debtor exactly what will happen does the trick in many cases
There are costs to consider which will be dependent on the level of the debt and these have to be found by the bookkeeping business.
If there is no other route to get your money, then go to the County Court - the forms are quite easy to fill in and in the majority of cases i believe there is no need to appear - correct me if i am wrong.
Regards
Acorn
|
|
|
Geoff,
Perhaps I didn't explain myself properly. When I said I had been down the small claims court route many times, I did not mean as a bookkeeper. In a previous life I was a manager of a credit union which had a high proportion of defaults when I took over. I put in place a credit control policy which ended with small claims court. I had to do this a number of times to clear the backlog, from there I put in place a proper policy to ensure we were lending to those who could and would repay.
I believe that a clear policy focuses the mind. I didn't intend it to sound gung ho. However I would not just ignore someone who refused to pay just because they thought I would not go after them by all legal means at my disposal. I can understand you saying you withdraw services, but would you just forget about the debt?
I also should note that as a bookkeeper I have never had a late payment, let alone a default. Knowing your client is absolutely the best way to prevent this, but the courts do have a place. I will protect my business to the best of my ability.
Like everything else there are those who will, and those who wont agree. But I suggest that even if you don't agree thats not enough to suggest this is sending a wrong message.
Kris
|
|
|
Kris
Clarity is always important, so I would still say that going down the litigation route quite a few times would be the wrong message to send to members if it was as a result of non payment of their fees.
The context in which you went down that route was entirely different and circumstantial and may therefore be appropriate in those circumstances. I know absolutely nothing about a credit union and the way in which it operates.
As you will see from my earlier posting - my bad debt over twelve years is £750 and it was exactly that, bad debt which it was not practical to pursue.
I was a credit controller in the 70's and did pursue debts via the legal system then , but that was what I was paid to do and it was someone else's decision as to how far the process went. I do however recall that even then there was one particular instance where the actual debt diminished into almost obscurity when compared with the eventual cost. And I do have clients who have their own debtor isues upon which I advise - but as yet none have taken that route and my success rate is pretty good.
I certainly would use legal action as a last resort for my fees but not as a first choice. Proportionality has to be at the forefront as to whether or not to pursue followed very closely by the essence of client relations.
But I stand by the best option, in my opinion and seemingly that of others who have responded, that prevention is better than cure.
Geoff
|
|
|
I wouldn't say the circmstances were entirely different. Non payment is non payment whether its a bank, a builder or a bookkeeper.
I think if you read my posts you'll find you don't disagree as much as you say. You seem to agree as a last resort the courts can be the right choice. You also seem to say that prevention is better than cure, and thats also what I say in my posts.
The point you seem to disagree with is when I made the point that court can be an effective way to recover debts, and that it's fairly simple and stress free. I would then say thats maybe down to personal differences. As a special constable I'm totally comfortable giving evidence in court, with civial and criminal being equally undaunting. I also find the paperwork straightforward and dont get stressed easily.
I never said it was always the right answer for everyone. But like everything it's how you choose to read it.
Kris
|
|
- Fellow PM.Dip
- Practice Licence
- 17 posts
|
kjmccullochsaid:
Look at it this way, many of us offer credit control services to clients, don't our own businesses deserve the best credit control policy our training can provide?
Kris
This has been a very interesting discussion. I am just setting up my business so it is very relevant. I do think that Kris has an interesting point that if we are going to offer credit control then we need to show that we are able to collect our own debt, if necessary. I intend to offer credit control, I already chase invoices at work so have some experience. Therefore I think I will put invoices payable in 30 days and charge interest at base rate plus 8% for late payments.
Thank you for all your replies, it is really helpful to hear what happens in practise.
Sylvia
|
|
|
Hi All
I have read this thread with great interest.
I have to say I do agree with Geoff that we should adopt a position of prevention rather than cure, However as Kris says if prevention is not possible we should know the steps we can take to cover our fees.
how many of you write to the previous bookkeeper for professional clearance. If we were to adopt this approach it would stop someone running up a bill then walking away. I would not seek to retain records as this can be a sticky area, having said that I would also not "rush" to return records to someone who owed me money.
To be honest I never had a problem being paid as if someone owed me money I would get a cheque before undetaking further work and for a lot of my client's I wrote the cheques and made sure I always included my payment!!
I did have a couple of business go down owing me money but as I did the books I knew their situation and took a commercial descion to support the client during a sticky patch as it would generate goodwill moving forward if the business survived.
I certainly found the easiest way of getting paid when parting company was to get the client to get the new accountants to wrtie to me for professional clearance so I can speak to them about any outstanding issues (Including my payment).
I have found the world is a very small place and it is surprising where people pop up in the future.
Kind regards
Stuart
|
|
|
A very balanced approach, Stuart, to which I would probably subscribe. Like you I'm not too comfortable holding clients records to ransom.
I've also had a few clients go into liquidation recently, but they both made sure I was paid up to date. One actually paid me from his own pocket.
Kris
Edited at 30 Oct 2011 06:46 PM GMT
|
