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Terms of payment
Page 28
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Cone are the days that a spit and a handshake were sufficient to ensure that one person would do the job and the other would pay him for it. Everybody in the cash-strapped haulage industry is working on low margins, and that means that delayed or missed payment can have a devastating effect on the viability of your business.
As the economy slows down, cash flow becomes even more important, if that is possible, than before, To promote cash flow, you must minimise the possibility of a challenge to your invoice as to the amount, due date or late payment terms. A written contract for every customer may be unrealistic but, if you work without one, it is all the more important that you ensure that both you and your customer know the terms under which the job is being accepted.
Interest payments If you use the RHA Conditions of Carriage 1998 as part of your terms and conditions, you are entitled to claim interest on all amounts overdue at the rate of 8% above the Bank of England base rate (currently 3.75%) at the date of your outstanding invoice.
If you have no terms and conditions, that
is not fatal. You can still rely on the Late Payment of Commercial Debts (Interests) Act 1998 to claim interest. The Act applies to all contracts for the supply of goods and services where the purchaser and supplier are both acting in the course of a business.
Businesses can be private or public sector. It will apply to contracts between businesses for the carriage of goods. The rate of interest under the Act is currently the same as the RHA Conditions. This rate can be varied by the Secretary of State from time to time. Interest will generally run from the due date of the invoice.
The Act is a good weapon for getting in cash. Also the current rate of 8% above base should go some way to off-setting the cost of delayed payments arid having to chase customers.