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Interest on late payments

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jpatokal
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Interest on late payments

Postby jpatokal » Wed, 02 Aug 2006 8:22 pm

Does Singapore set legal minimum/maximum/default interest rates for overdue bills? 1.5-2.0%/month seems to be standard, but what would the courts assume if the bill says nothing? I've got a client who's fallen a little behind and would like to know where I stand and what I should start adding to the small print at the bottom of my invoices.
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briceloh
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Re: Interest on late payments

Postby briceloh » Wed, 02 Aug 2006 8:34 pm

jpatokal wrote:Does Singapore set legal minimum/maximum/default interest rates for overdue bills? 1.5-2.0%/month seems to be standard, but what would the courts assume if the bill says nothing? I've got a client who's fallen a little behind and would like to know where I stand and what I should start adding to the small print at the bottom of my invoices.


There's a problem when no interest for late payment is stated. My dad have to serve them a court order to make them pay. Of course, they paid for the lawyer's letter too. But no interests... :?
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Postby jpatokal » Thu, 05 Oct 2006 11:30 pm

So I've been adding the 2% boilerplate to my invoices lately, and the same client is again falling behind. Sent a reminder last week (by email), got an "oops sorry will pay asap" response, but we're still inching toward one month overdue. Time to resend the invoice with 2% tacked on? (Which would be several hundred dollars extra.)
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Postby sundaymorningstaple » Thu, 05 Oct 2006 11:53 pm

JP,

I guess the obvious question here would be "are you willing to take the guy to small claims court to collect? Considering that is the cheapest solution (provided all your ducks are lined up) are you willing to 1) go to seizure to collect a couple of hundred dollars and lose a client or 2) continue as is and while keeping a client, possibly creating a cashflow problem (not really a problem if your are selling services. Bit different if you have to purchase inventory. We always boilerplate a 1.5% service charge for late payments but invariably end up issuing credit notes after they eventually pay the invoice total. It sucks but what to do? I actually created a Reward Program with my last employer and managed to get 85% to eventually pay within 30 days. Previously only about 30% would pay under 30 and a wopping 45% over 45 days.

Problem is, unless you are talking about 4 digit interest penalties it will cost more to seize and auction that you would get using the SBT. :x

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Postby jpatokal » Fri, 06 Oct 2006 4:00 pm

sundaymorningstaple wrote:I guess the obvious question here would be "are you willing to take the guy to small claims court to collect?

The whole sum, yes. (Don't think it'll come to that tho.) The interest, no.
We always boilerplate a 1.5% service charge for late payments but invariably end up issuing credit notes after they eventually pay the invoice total. It sucks but what to do?

Sorry, run this by me again -- so you send a nastygram saying they now owe you 101.5%, and when they pay you 100% (without the 1.5%), you send 'em a new note saying they don't owe you 1.5% after all? :o
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Postby sundaymorningstaple » Fri, 06 Oct 2006 9:07 pm

jpatokal wrote:Sorry, run this by me again -- so you send a nastygram saying they now owe you 101.5%, and when they pay you 100% (without the 1.5%), you send 'em a new note saying they don't owe you 1.5% after all? :o


When we invoice clients all of our initial invoices have the following at the bottom of the invoice description area..."All invoices unpaid after our standard terms of nett 30 days are subject to 1.5% late payment interest per month on the balance due."

When we send them a reminder letter with a copy of the invoice we also tack the interest charge to the invoice. Normally they will pay only the "Original Invoice" amount. Due to the fact that our invoices don't generate huge late payment charges either we will leave the balance on the aging for a month or two and then just issue a credit note against the interest charges (not bothering to send it to the client - let them think it's still past due). Normally, this will at least generate a payment. If they're chronic then I would have to look at their normal payment history and maybe talk to their accounting department to see if the batch process invoice payments (a large number of companies do so it could be 45-50 days due the the processing dates (a couple of banks do this - damn them - we've talked about that already! :evil: ).


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