Late Payment of Commercial Debts
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Excuse 21: We're good payers, why upset us?

Applicability

Where a supplier is normally a good customer, pays on time, and missed one invoice by some oversight.

Underlying reasons

The customer does try to pay on time, and normally manages it. They feel upset that an invoice was issued.
This usally happens when you have a good customer with a good business relationship, who has managed to miss one invoice and pay it later. They feel upset that you have automatically slapped a £40 fine on them with no warning. In practice, they had warning - they had the invoice with a due date, and probably had a statement.

Resolution

  • In such cases it obviously makes sense to credit the charge as a one-off mistake and in the genuine interests of good will.
The question here is should the invoice have been raised, or should it have been manually checked and considered - and maybe not raised as it was clearly a mistake. Something of good account management - talking to the customer. Well, talking to the customer about it is probably a good idea - but usually you can only tell the invoice was going to be paid late after it is already late - especially with customers that regularly pay just in time.

What is probably worth explaining is that the invoice and credit note is in fact doing the customer a favour. If you did not raise the invoice, the liability still exists. It exists and can be pursued up to 6 years later. By raising the invoice, and crediting it, it is clear and on record that after the debt was created it was agreed to waive it. You still have the issue that such an agreement may not have formed a contract as there is usually no consideration, but it makes it that much harder for the penalty to be re-claimed later. So, if we had done what any of their other suppliers had done, and simple ignored the late payment, then they would be worse off, with a penalty hanging over them for 6 years. Being open and honest about the liability, and agreeing to waive it, is a good thing for the customer. It also serves as a gentle reminder to pay on time next time!