Invoice problems

[Ivo]

Does anyone on here know much about the legal side of invoices at all please?

Basically, back in February I did some work for a major company who shall remain nameless (but can probably be guessed, especially by those who have access to my Facebook account :roll, and it took them TEN WEEKS just to confirm they were actually going to pay me. I thus submitted an invoice for said work, literally a matter of minutes after being asked to, and am still yet to be paid - and have been informed that it will be another two weeks yet before I am likely to see even a single penny. As of now, the invoice was sent off almost seven weeks ago, shortly after midnight on April 26th; by contrast, the work was undertaken between February 14th and February 22nd - so it took them over two months just to confirm I would actually get anything.

Further to this point, the company want me to do more work for them in the very near future, potentially starting as early as today, and there may be more to come. But how can I commit to this work if I don't know when I will see anything for it? Based on the same 17-week timeframe, it will be October by the time I see anything in return for a new job!

The underlying problem though is that no contract was ever signed, although there is plenty of written evidence confirming that payment will be made. So assuming this goes on for much longer, what are my options? What can and can't, and should and shouldn't, I do? And can I realistically trust this company from a work perspective again?

 

[asylumxl]

In my experiences companies like to hold their pennies till there is a more convenient time for them. I say just stand your ground and keep on it. They'll pay you eventually.

It might also be worth saying something along the lines of "I won't do any further work until payment is received for the previous work". Just make sure you don't budge.

 

[eastwestdivide]

To take a different slant, from the company's point of view, all the while you haven't invoiced them, their accounts people aren't likely to make a song and dance about it.
(I know that's not the way you see it, but accounts people like to work with definites).

I'd have invoiced them as soon as the work was delivered. For future work, quote them before you start on the basis of payment 30 days from the date of the invoice. If they don't quibble and give you the work, then they've accepted your terms and conditions (not that they're likely to conform to them, but it gives you another lever).
Two months from the date of the invoice isn't uncommon unfortunately, and the bigger the company, the worse they are in my experience.

I think I'm lucky if I get paid 30 days after the end of the month in which I submit the invoice, which if it's early in the month, means close to 60 days.

All in all, you've got to balance up the hassle of chasing the money and the delay versus the need to work.

The joys of being self-employed: people think you're your own boss, but the reality is different.

Good luck.

 

[DaveNewcastle]

Your Invoice is a legal document and payment can be enforced if it was made out correctly and if the Company have no counter-claim or dispute (which should be notified to you in reasonable time). But I don't think your question is about Invoices; rather, you seem to be asking about credit terms.

I expect the company has a policy on credit terms and the operation of its monthly cycle of payments of credit accounts. As eastwestdivide has said, it is common for Companies (and individuals) to pay at the end of the following month or about 60 days after receipt of invoice. The date when you did the work is immaterial in that cycle. I also see that midnight on 26th April was on a Friday night, so the invoice wouldn't have been received until the following week, and then may have required the approval of the person checking the work and the person managing the budget. It may have been early or mid May by the time it was approved and ready to log it into the Creditors' Ledger system. Add 60 days, and that takes you to early or mid July for payment.

That's normal.

I have no intention of guessing who your customer is, but if you have concerns about their ability to pay then you can take a check on their credit rating; though the sensible time to do this is before you do the work on credit terms; there's not much point in checking afterwards.

As a couple of additional points, it is good practice for an invoice to state the Credit Terms that are being offered, e.g. 30 days. This does not provide a condition of contract but can be a helpful reference when trying to chase a payment. Many Companies use Credit Departments who are forever telephoning their Customers to seek a date by which their invoices will be paid and send regular reminders, Statements of Account and Debt Collection letters, all as part of the routine cycle of maximising their cash flow (against which the same firm's Payments Deparment is taking as long as possible to pay, also in order to maximise their cash flow).

You should consider doing the same - call their Creditors Payment section and ask when it will be paid and get the name of the person who told you. You can call them again if you don't receive payment on that date to ask for an explanation. Send a Statement of Account listing your invoice(s) and mark any that are more than 30 days old as "overdue for payment".

It's rather reckless to perform chargeable work without a written contract, but there are implied Contracts which can be evidenced by the work being done following instruction to do so. If it came to enforcement, there may be enough evidence to show that a Contract existed, and your Invoice would be a part of that evidence. I will do work for some clients on the basis of a simple email instruction from an appropriate person and will make sure that they are aware of the rates or cost in exchange. But it will always help to have full Terms of Business exchanged - most large Companies will only do business on their Terms, in which case they should be read and understood, as those are the conditions under which your work will be paid for.

 

[Wyvern]

Until a few years ago it used to be standard practice to delay payment as long as possible.

There was a big hooha about about ten or so years ago, because small businesses were failing due to cashflow problems. They had paid out for materials,for instance, and were paying interest to their banks or had their capital tied up.

I deal with two major book distributors and they now unfailingly pay at the end of the month. It helps that I publish my bank details so they can use BACS. (On the other hand the high street retail shops dont bother to pay at all, so I now insist on CWO. )

Public bodies like councils have always been notoriously slow payers and the experience of a counsellor friend of mine tells me they haven't improved.

So I'm afraid credit is one of the bugbears of being self-employed.

 

[richw]

Until a few years ago it used to be standard practice to delay payment as long as possible.

Indeed customer would rather hold out as long as possible and earn interest on the funds being in their account.
If a contractor isn't chasing them and following up they will see it as an easy delay to keep the interest.
When I was doing some admin for a local businessman, I was instructed no invoices were to be paid until the very latest time possible, and often contracts didn't have a payment date included, so many were not paid until recovery action was threatened.
This appears to be common practice unfortunately for the worker.

 

[IanXC]

Its worth also having a look at major companies websites/annual review documents, as many have committed to payment terms for small businesses, as a Corporate Social Responsibility issue.

 

[DaveNewcastle]

Public bodies like councils have always been notoriously slow payers and the experience of a counsellor friend of mine tells me they haven't improved.

Indeed.

In the case of Local Authorities, it's my experience that the reason isn't just a delay in a wish to maximise their cash flow by delaying payments, but rather it's due to a poor sense of commercial practice.
To illustrate: one Authority I deal with can take months to pay some Invoices, others have Invoices regularly going astray, Invoices being paid twice, and in return, Invoices from an Authority to me takng nearly a year to be issued! Repeatedly.
They live in a world of their own.

 

[Ivo]

Before I make any comments, thank you to everyone who has responded (including on via PM).

The first thing to note is that, due to an apparently short-sighted suggestion by my University, I was told to note the date as "14 days" - a bit tight, as I now know. I changed the 14 to 10 working days, which allowing for May Day gave them 15 instead of 14, but either way I now know thyat this is somehwta unreasonable and will not follow this irecommendation in future. This said however, as stated I didn't even know they were going to pay me until the end of April - before then, "shopping vouchers" or similar had been suggested due to tax issues - and even that was only through invoice, when in theory a formal process could have been completed long before that. (By the way, by "midnight" I mean in the early hours of the 26th, giving them the Friday as Day 1.)

I have already decided that I will be asking to have a contract in place for future work, but seeing the various suggestions above just makes it that much more sensible. I fear it is too late for this time, but certainly for a theoretical third duty - expected late next month - I would want something formal in place.

I am meeting with several managers from this (rather large) company later today, one of whom is genuinely sympathetic about the delay and has tried to push the case for me repeatedly. I shall have to see what comes out of that. Irrespective of tonight though, thank you again for all the helpful comments so far.

 

[maniacmartin]

I can't add much that hasn't been said above. In future, put a due date (such as 30 days) on the invoice and send it as soon as the work is completed, and chase it up after the due date.

I have two stories of my own regarding this...

First, I used to work for a PLC who I won't name here. They had an internal policy to pay all invoices 30 days after the due date, presumably so that they could sit on the money for a month and make some interest. Since they placed regular orders with suppliers, most suppliers didn't stand up to them for fear of not getting repeat custom, but it did cause a few problems when you urgently needed to procure something and found that a supplier had blacklisted you!

Secondly, my partner did some work for an NHS Trust. After months of unreturned calls, unanswered letters, invoices and formal complaint, they have finally paid up, but due to their own total incompetence, have paid the wrong amount, and we are still chasing the rest. The amount of effort that has been spent chasing up the invoicing is now more than the hours taken to do the work in question. I think they think we'll just give up and walk away given less than £100 is outstanding, but it's a point of principle on our part.

 

[DaveNewcastle]

. . . by "midnight" I mean in the early hours of the 26th, giving them the Friday as Day 1.

Er, no.

It is only reasonable to consider full, normal working days. By sending your invoice by email on a Friday night, then the first day on which it could reasonably be seen and considered by any accounts clerk begins with the Monday morning and runs through to the Tuesday morning. So "Day 1" ends on Tuesday.

We can't just make up our own interpretations of the business of bookkeeping and accountancy; it is a practice which has become well established over its few thousand years of development!

 

[Ivo]

I think you may have misinterpreted what I've said. The 26th was indeed a Friday - but my e-mail was sent in the early hours of the 26th. "Just after midnight" on the 26th, to me, means about 00:30 or so on the 26th, which means it counts as Day 1. (In this case it was actually 00:28.)

If this wasn't how it looked then I apologise but the simple fact is that it was sent very early on the 26th, and long before the Working Day of the 26th would have begun.

 

[Crossover]

If you are still awaiting payment after about a month and a half from invoice date, I don't think it is anything unusual.

Having worked in Credit Control before now, I know full well how long it can take for people to pay and how much chasing is required. That said, it does tend to be the larger companies who seem to take the longest, but as others have said, this is generally as they have their own way of working and have set times and payment runs, as opposed to small independants who will write a cheque while you are on the phone with them (or pay by card or such like)

Credit terms of 30 days is fairly normal - 14 (or even 10) days is a little bit tight and may well go ignored by some companies, unless there is specific reason for it being so.
--- old post above --- --- new post below ---

I think you may have misinterpreted what I've said. The 26th was indeed a Friday - but my e-mail was sent in the early hours of the 26th. "Just after midnight" on the 26th, to me, means about 00:30 or so on the 26th, which means it counts as Day 1. (In this case it was actually 00:28.)

If this wasn't how it looked then I apologise but the simple fact is that it was sent very early on the 26th, and long before the Working Day of the 26th would have begun.

As DaveNewcastle has pointed out, this isn't how things are likely to work. Where I work now, an invoice may be received, possibly by email, and it could be a day or so before it gets passed to me to check and sign it off. It then has to go to be countersigned before anything is entered into the ledger and it then gets put in the payment queue.

It sounds like you may be on terms of "end of month following" so it wouldn't surprise me if you were to receive payment within the next couple of weeks.

It won't do any harm to call the accounts dept of the company you are doing work for and to clarify the invoice in the system and to enquire when the payment is due. At least with this, you have something to work to (and to chase them on after such time)

 

[michael769]

It is, if your line of work allows, worth imposing a condition that any parts or materials remain your property until payment is made.

This can be useful if a company goes bust as can then force administrators to reimburse you for the parts (or return them to you) rather than see them being added to the general pool of assets to be shared amongst the unsecured creditors (which usually means you get nothing after the secured creditors are paid)

The biggest issue for small traders is companies failing before the bill is paid.

 

[Wyvern]

Do you have a written agreement before you start work? That will set out the conditions under which you are prepared to work, including payment periods annd retention of property, giving you a better case if there are later problems.

Unfortunately, gentleman's agreements dont carry much weight nowadays.

 

[Flamingo]

Be careful of their terms. A friend was recently telling me that a very large company who approached his firm for some work doing had T&C that included they had the right to send auditors into his company at six monthly intervals, at his expense, to ensure that their standards were being kept to (amongst other punitive terms from his point of view, and disclaimers from theirs).

He told them "No Thanks" (it wasn't that much work), and then found from a reply e-mail that included a whole string of e-mails that he was the third or fourth company that had declined the work!

 

[Ivo]

Sorry to Dave et al - I honestly didn't know this. I had thought that the first working day was defined as 0900 on the first theoretical working day, meaning a submission of 00:28 on a Friday morning would be treated as said Friday being Day #1, and then the following Monday as Day #2, and so on.

As stated before, I will not use 14 (etc) days again. One would have thought that a University finance operation would know to advise against something like that, but apparently not! I will also be seekign stricter terms come the next run, such as a contract should that be applicable. Ultimately, I know very well that countless written messages only stand for so much - without a signature, no such formality exists...

 

[Peter Mugridge]

Be careful of their terms. A friend was recently telling me that a very large company who approached his firm for some work doing had T&C that included they had the right to send auditors into his company at six monthly intervals, at his expense, to ensure that their standards were being kept to.

If the very large company was accredited to ISO 20252:2012 ( the latest version of the old BS5750 ) then it is a requirement that they send the auditors in every now and again otherwise the very large company will lose their accredition to the ISO standard.

I don't think it is a requirement that they have to make the supplier pay for that though! Nor is it a requirement that they go in every 6 months...

 

[Flamingo]

I don't think it is a requirement that they have to make the supplier pay for that though! Nor is it a requirement that they go in every 6 months...

His view as well...

 

[cjp]

I have already decided that I will be asking to have a contract in place for future work, but seeing the various suggestions above just makes it that much more sensible. I fear it is too late for this time, but certainly for a theoretical third duty - expected late next month - I would want something formal in place.

I am meeting with several managers from this (rather large) company later today, one of whom is genuinely sympathetic about the delay and has tried to push the case for me repeatedly. I shall have to see what comes out of that. Irrespective of tonight though, thank you again for all the helpful comments so far.

I think you need to produce your invoices quicker but you might like to look at this information about charging interest.
https://www.gov.uk/late-commercial-payments-interest-debt-recovery
Note the caution on the first page.
Making reference to the Act on your invoices might just make then think about their payment arrangements without harming the relationship.

From the other side I have told all our suppliers that we make payments every three weeks. This notification is repeated every time we place business so everyone knows where they stand. As our payment interval is better than most I find that suppliers are happy to deal with us. Additionally with interest rates being so low it costs us very little to have a good relationship with contractors.
Of course it all depends on invoices being processed in a timely fashion but with direct payments into suppliers' bank accounts life is simple.

 

[Peter Mugridge]

His view as well...

Since posting that I checked with a quality standards person; indeed there is no requirement to make the supplier pay.

They do have to send auditors in, but if they try to make the supplier pay for it, they're effectively trying it on. It's not forbidden, but it is very morally dubious.

The every six months bit is rubbish as well; it just has to be at reasonable intervals.

 

[michael769]

If the very large company was accredited to ISO 20252:2012 ( the latest version of the old BS5750 ) then it is a requirement that they send the auditors in every now and again otherwise the very large company will lose their accredition to the ISO standard.

What makes you think IVO is a market researcher?

http://www.iso.org/iso/home/store/catalogue_ics/catalogue_detail_ics.htm?csnumber=53439
--- old post above --- --- new post below ---

without a signature, no such formality exists...

Not true. All you need is evidence of an offer and an acceptance along with evidence of the agreed terms.

A signature is one way to confirm that the other party has received and accepted terms but it is not the only way, and with more and more business being transacted via email or telephone it is becoming increasingly the norm to agree contracts without recourse to signatures.

 

[Peter Mugridge]

What makes you think IVO is a market researcher?

I don't; I simply quoted the nearest current standards reference number that I had* - I am told that the same auditing requirements apply to all parts of what used to be called BS5750.



*Trying to keep things simple!

 

[swj99]

I remember many years ago I did a couple of weeks work experience in the accounts office of a firm of coachbuilders. I don’t know why, because I’d repeatedly told the college I was going to work in the legal profession, so I’d asked if I could go to a firm of solicitors.
Anyway, the invoices rolled in every day, and got filed. When I queried this, I was told not to worry about it. They explained that they only requisitioned a cheque and sent a payment when a letter arrived threatening court action for the recovery of the debt if it wasn’t paid within 14 days. I wonder how many of their suppliers struggled with their cash flow as a result of this policy.

More recently, about 3 years ago, a friend of mine was at the time running an electrical installation business. Against the advice of his bank manager, he entered into a contract with a larger company, to do the wiring in newly built houses, even though the company had a reputation for poor payment, and an iffy credit rating. He trusted the firm, who paid him small amounts of money over a few weeks, just enough to keep him and his employees turning up every day. The firm who he had the contract with eventually went into receivership so he didn’t get paid, and he had to close his business. He was owed several thousand pounds. He managed to find out the home address of one of the directors, and was promised on numerous occasions that he would be paid “next week”, but this never happened.

I’ve formed the impression over the years that the longer you leave it, the harder it can be to get paid. As soon as there is any hint of a problem, or any question over whether you will get paid, get on the case, chase the debt and keep on doing so, until you get paid. It seems a shame to have to work for the money twice, but occasionally that’s what people end up having to do in order to get paid. Sad but true.

If all else fails, you could send them a letter based on the script of a Hale and Pace sketch, where they said, "Stick a cheque in the post, before we stick a post in you !"

 

[Xenophon PCDGS]

I am now retired, but I do know that in the past, some of the very large companies in a certain heavy engineering sector of industry viewed a 90 day period of payment as the norm.

I remember a friend who was a senior manager in a pump supply company telling me that a company in the GEC grouping found that they urgently needed a very large macerator pump unit which was made by my friend's company, that GEC needed desperately to replace one that was life-expired.

Deciding to make a stand over the matter, having a large number of invoices unpaid by the 90-day payment system at the time of the query, my friend instructed his accounts manager to send a letter of confirmation to state that there was just one of these units in stock, but to note that a pro-forma invoice was attached, stating the goods would only be despatched on the immediate payment of the pro-forma invoice in advance of delivery being made.

Such was the desperation of the GEC company, that a personal visit to my friends company by a senior GEC manager ensued, together with a bankers draft, to ensure compliance was made. Amazing how desperate need can obviate the most hardest stringencies employed by accounts departments to delay payment for as long as possible.