The FMB Information Services Department advises members to check customers’ financial status and set payment terms before commencing work.
In these difficult market conditions, many companies are facing problems with late or even non-paying customers. So what measures can you take to help prevent this from happening?
-
Check that you have the exact name, address and landline telephone number of the person or business that you are supplying
-
Check the credit status of your customer. You can use the FREE FMB credit check service available to members here.
-
Or alternatively, contact the FMB on 020 7242 7583
-
Ensure that customers know and agree your payment terms from the start and include details of your payment terms with any estimate or quotation
-
Use a written contract with agreed payment terms. You can download the FMB Plain English Building Contracts from the FMB website here.
-
Make sure that staged payments come in on time and send a written reminder if they do not
-
Send your invoices promptly. Ensure that they are dated, are clear and accurate and that the payment due date is clearly shown
-
Include the following clause in your invoice: We will exercise our statutory right to claim interest (at eight percent over the Bank of England base rate) and compensation for debt recovery costs under the Late Payment legislation if we are not paid according to our agreed payment terms.
See the Businesslink website for further advice on what to include in an invoice here.
-
Write to the customer to chase payment as soon as an invoice becomes overdue.
INTEREST ON LATE PAYMENTS
You have a statutory right to claim for interest on late payments and compensation for debt recovery costs from other businesses, local authorities or public sector bodies. If such an organisation pays late, you should make a written demand for the interest and/or compensation for debt recovery costs.
Raising a further invoice is a good way to gain your customer’s attention and raises the profile of your outstanding invoice. The Late Payment Regulations do not apply to customers who are private individuals. However, if you are using FMB Building You have a statutory right to claim for interest on late payments and compensation for debt recovery costs from other businesses, local authorities or public sector bodies. If such an organisation pays late, you should make a written demand for the interest and/or compensation for debt recovery costs. Raising a further invoice is a good way to gain your customer’s attention and raises the profile of your outstanding invoice. The Late Payment Regulations do not apply to customers who are private individuals. However, if you are using FMB Building contract, then the clause on interest rates specifies that interest is charged at three percent a year above the Bank of England base rate.
If there is no response to your written reminder, contact the FMB Information Department for options available to help members with debt recovery.
Do this sooner rather than later - as the longer a debt is outstanding the harder it is to recover. Tel: 0207 092 3891.
Remember that it is Government policy that Government organisations should pay suppliers within 10 days wherever possible and they require major suppliers to guarantee subcontractors working on Government contracts are paid within 30 days and encourage them to pass these payment terms down the supply chain.
If the customer is a business or public body you can also check to see if they have signed up to the Government’s Prompt Payment Code of Practice. Visit: www.promptpaymentcode.org.uk
