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Blog posts tagged late payment

Should I name and shame my late payers?

June 20, 2016 by Guest contributor

Should I name and shame my late payers?{{}}You wouldn't believe how angry some of the entrepreneurs and business owners we deal with get about customers that won't pay their bills. Well, perhaps you would!

If you've experienced a customer that's given you the run-around on payment you'll know just how infuriating it can be. After all, there's plenty at stake - even highly profitable firms can be put out of business when the cash stops flowing.

Is naming and shaming really a good idea?

Social media has transformed how easy it is to make it public just how annoyed you are with a customer who isn't paying their bills. I have seen a fair bit of discussion online about naming and shaming of late paying clients in recent months, but is it really such a good idea?

Trevor Tierney, a sole trader, obviously thinks so. He was so annoyed by late paying customers that he set up a website (called 60 days.com) where you can name and shame customers. For a small fee you can log in and report a late-paying offender, and have a look to see who else is there on the list.

Going public with your feelings about your customer might make you feel a bit better - and you could even see it as a public service to help make other business owners aware - but I strongly believe that you should keep your grievances to yourself. There are far better ways to work behind the scenes and bring in the payment, and there are good reasons not to wash your dirty linen in public.

Reasons to be cautious

First, there may be a good reason why your customer has not paid you. They may not have received your invoice or there may be some errors on it that they haven't told you about. How embarrassing would it be to go public, only to discover that there was a reasonable explanation after all?

Secondly, you might open yourself up to legal action by dishing the dirt on your customer. Lesley Kemp, a freelancer from Milton Keynes, tweeted about a Qatari client that had not paid her. As reported on BBC news recently, she was hit with a legal claim of £120k for defamation.

Thirdly, you risk harming your own reputation. Would you want to do business with a company that takes to Twitter or Facebook every time it has a disagreement with its customers?

I do not advocate naming and shaming your debtors. I believe it is almost certain to annoy them and lower your chances of collecting an overdue invoice. If you have a problem with an overdue invoice, why not look for professional outside help instead?

Copyright © 2016 Samantha White, ceo at My Credit Controllers, outsourced credit control and business debt collection specialists.

More on this topic:

PAYE – new late-payment penalty legislation for the 2010-11 tax year

April 22, 2010 by Tim Haggard

We’ve seen many new taxes come in under the radar over the past few years, but for me, this is probably the most badly thought-out, badly communicated of the lot. And once again, it’s being left to accountants and tax advisors to communicate the bad news.

If you employ staff, you’ll be familiar with the need to pay monthly PAYE and NI contributions to HM Revenue & Customs (HMRC) by the 19th of the following month.

Up until now, the legislation has been such that if you pay late, it doesn’t really matter. HMRC might write nasty letters – or even send someone round – but ultimately, there was no penalty for paying late. The trick was to get everything square by 19 May annually, and there was no comeback.

This changed on 6 April this year, when the new legislation came into effect.

Here is a brief synopsis of the new rules and penalties for those on the main monthly scheme:

  • pay your monthly liability by the 19th of the month following (this is the date by which the funds must be deposited in the bank account at HMRC – so beware of paying online on the 19th. Confirm with your bank that it will get there on time);
  • pay late once in any year and there’s no penalty – unless the payment is more than six months late – see below;
  • pay late two-four times in any year, you’ll be fined 1% of the total amount that is late (ignoring the first late payment), so, if your monthly payment is £10,000 and on four occasions you’re a day late paying, the penalty will be 3 x £10,000 x 1% = £300;
  • pay late five-seven times and you’ll be fined 2% of the total amount that is late (ignoring the first late payment);
  • pay late eight-ten times and you’ll be fined 3% of the total amount that is late (ignoring the first late payment);
  • pay late 11-12 times and you’ll be fined 4% of the total amount that is late (ignoring the first late payment);
  • if any payment is more than six months late, you’ll have a pay a penalty of 5% of the overdue amount. If the payment is 12 months late, you will pay a further 5%.

No due reflection is given to the extent to which you’re late. If you are one day late, the penalty will apply.

From an administrative point of view, the law allows HMRC to charge penalties at any stage during the tax year, or after the end of the tax year up to two years of the due date.

In 2010-11, penalties will be charged after the end of the tax year. Therefore, penalty notices will not be sent out until April or May 2011. So please don’t test the system and think you’ve got away with it – you will get a nasty shock in April next year!

 Tim Haggard is founder and managing director of My Bookkeeping Online Ltd

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