Timely payments are crucial to one’s business and livelyhood. Regardless of whether you’re an employee or business owner, you need to be paid and on time. No employee takes it lying down when pay day arrives but payment isn’t in their bank account. So why should a service provider wait beyond the invoice payment date?
Timely payments are a must for business owners. Payment for services are done on a date stipulated in the contract between client and service provider. There isn’t much of a difference in a contract between employer and employee. An employee’s payment day is part of the contractual agreement. Failure to pay an employee on the agreed fixed date is a breach of contract.
If your client fails to pay you on the payment date stated on the invoice, the client is in breach of contract. Of course you make allowances and offer flexibility, but you need to strike a balance. Always have stipulated in your terms of service that failure to make payment on a certain date will result in an accumulation of late payment fees.
Small Business, Enterprise and Employment Act 2015 s3 came into effect in April 2016. Businesses have to report on payment practices and policies. These include, standard payment terms, dispute resolution processes, number of late payments and interest owed.
If you’re a business owner or service provider, you shouldn’t have to wait beyond the invoice payment date. Late payments impact negatively on cash flow and stunt business growth. You can revise your terms of service by introducing a clause relating to late payment fees. You will have to discuss this with your lawyer so that fees and dates reflect your business.
If you’re a new business, your business lawyer will definitely advise you to insert a late payment fees clause. Some businesses will allow 8 to 30 days before they charge clients with late payment fees. These fees vary from business to business. It’s up to you to decide when and how much you should charge, but we highly recommend that you discuss this with a legal expert experienced in business law as well as someone who runs a successful business. Please get in touch with us for an initial no commitment consultation. SG
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