Excuse 3: £40 is extortionate
All, although this generally only makes sense for the first penalty or
for a penalty relating to small value invoice
|Customer understands penalties
apply but feels £40 is not reasonable
|The penalty amount is dictated
by statute, and there is interest as well so it is not relevant whether
it is reasonable or not.
The very fact that the level of penalty is causing such offence means
it is probably the right level as it is meant to be a deterrent. e.g.
if the penalty was £1, then it would be ignored by the customer and not
worth collecting by the supplier and so not do the job.
We have found that we have one person in accounts who's full time job
is chasing late payment, even now. Whilst we collect many thousands of
pounds in penalties over the year, this does not quite cover their
salary, so £40 probably isn't
reasonable - a reasonable amount would be
a higher value.
|Customer does not believe they
have an obligation to adhere to the agreement they have made
|How much we charge for penalties
should not be an issue - it only
applies if the customer breaks the contract and pays late. Customer
probably has a fundamental misunderstanding that they don't have to do
what was agreed, but that it is fair to do whatever they can get away
with and feels aggrieved that they failed to get away with paying late
when they usually do (with other suppliers).
- A policy of crediting the first charge works will in this case.
Customer will realise that the penalties are not an insignificant
amount and that paying on time is important.
- Failing that - customer should pay, and will not do it again