Navigating the payment process

Navigating the payment process2017-02-19T13:49:45+00:00

a mazeThe maze represents the infinite challenges customers may place in the path of the supplier seeking payment for valid invoices.

Even when payment milestones are reached, acceptance has taken place, and the appropriate acceptance documents are produced, actually getting to payment can be a tortuous process.

Before starting work, ensure both parties understand exactly how the invoicing and payment process is supposed to work. If there are specific requirements from the customer relating to how invoices are submitted, and what information has to be on them, agree this in writing up-front.

Have an agreed timescale for disputing invoices, so that the customer does not simply ‘sit on’ each invoice until chased by the supplier, and then respond with questions and disputes. In the event of late or non-payment of invoices, specify what remedies are available to the supplier – interest, through the Late Payment of Commercial Debts (Interest) Act 1998 is a good one (and applies whether it’s specifically included in the contract or not), as is suspension of further deliveries of products or services.

Bear in mind that if you intend to suspend delivery of products or services in response to late payment, you MUST specify this in the contract. Otherwise, you may put yourself in breach of the contract by withholding products and not responding to orders in the contracted way, even if the other party has failed to pay. This is a classic example of putting yourself in the contractual wrong, when you are morally in the right!

Want to know more? Contact Devant for contract assistance!