European Communities (Late Payment in Commercial Transactions) Regulations 2002

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sinead

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Quick question about the European Communities (Late Payment in Commercial Transactions) Regulations 2002, is there a set standard of interest????



We received a letter from a company who invoiced us on 16th May for less than €80, it was a pure oversight on my side not sending payment. Then on Monday we got a letter and another invoice for €40 for a compensation charge, can they do that?



Any help would be greatly appreciated :confused:



Sinead
 
It's very unlikely.

I assume that a maximum rate of interest is specified in the regulations.
I also assume that your attention must be drawn to the possibility of interest on late payment on the face of the invoice or in some agreement.

Whatever the rules, I would doubt if they could charge an APR well in excess of 150%. Unless there is scope for a minimum charge.

Do you still do business with these people? It's bad commercial practice.

Brendan
 
Thanks for the reply Brendan, to answer your last question this is the first and last time I have done business with them, the original invoice did not mention anything about late payment.



This is the reply I received when I questioned the additional invoice –





Our Invoice ref: ***** in the amount of 40.00 Euro was issued to you on Friday 8th July. Under the European Communities (Late Payment in Commercial Transactions) Regulations 2002 we are entitled to seek compensation in respect of recovering amounts owed. The rate for recovering a debt of upto 1000 Euro is 40 Euro. It is our entitlement to seek this compensation at 30 days from date of invoice.









 
According to the [broken link removed], this is well within their rights, anything under €1000, they are allowed to claim €40 compensation for 'recovery', but do not have to vouch that they have actually spent any money on recovery (Schedule to Regulation 9).

The rate of interest allowable appears to be the latest ECB refiancing rate plus 7%, so around 9% at the moment.
 
sinead said:
Can they do that?
Click to expand...

According to the legislation http://www.entemp.ie/enterprise/smes/latepay.htm yes.

As an independent consultant I have to say late payments are a major drain on resources and cash flows. In one case I had an unpaid invoice that was over 160 days late.

As Brendan mentioned it could be bad business practise to threaten this leglislation onto a customer, but at the end of the day it may be the only way of getting your money.

C
 
Yes they can, its unusal though, you must not be a regular customer as I dont know of any that companies that would charge it.

I would advise you know to pay the €80 that the invoice is for, the other 40 will disappear then i'd say
 
I have been waiting for payment of just under €2000 for just over a year.

I note from the link above............

http://www.entemp.ie/enterprise/smes/latepay.htm

....that..

"From the 1st January 2009, the late payment interest rate is 9.50% per annum (that is based on the ECB rate of 2.50% plus the margin of 7%). That rate equates to a daily rate of 0.026%. Penalty interest due for late payments should be calculated on a daily basis."

1. Since my invoice predates 1st January of this year (it's actually 15th April 2008) can I apply the interest retrospectively?

2. If yes, should I apply interest of 7% + 1% (current ECB) on the total, or should I calculate the daily rate for the 380 days, or so, since the invoice?

3. If I didn't indicate on my invoice that I would apply a penalty for late payment (I didn't because I've never had this problem before!) am I prevented from doing anything?

It would be great if the small claims court was made available to small business to business claims. Then people would really stand up and take notice.

Thanks.

D.
 
The regulation is in force since 2002, full title - S.I. No. 388/2002 — European Communities (Late Payment in Commercial Transactions) Regulations 2002.

I don't know of anything that would prevent you from using it.
 
mathepac said:
I don't know of anything that would prevent you from using it.
Click to expand...

It wouldn't apply where there was a contract in place between both parties which agreed other payment terms. If there is no clear contract with alternative terms, then it applies.
 
Bob_tg said:
It wouldn't apply where there was a contract in place between both parties which agreed other payment terms. If there is no clear contract with alternative terms, then it applies.
Click to expand...

Bob,

Please explain how you would define 'contract' in my case?

I issue bog standard invoices with the line "Terms: 30 days from date of invoice" written along the bottom.

This was the first time I had worked for the individual concerned, so there were no precedents.

Many thanks.

D.
 
Dinarius said:
Bob,

Please explain how you would define 'contract' in my case?

I issue bog standard invoices with the line "Terms: 30 days from date of invoice" written along the bottom.

This was the first time I had worked for the individual concerned, so there were no precedents.

Many thanks.

D.
Click to expand...

In such case the late payment regulations would apply. The terms are tpayment within 30 days. Anything after that is late.
 
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