If you are paying a commercial supplier late then they could charge you penalties - you are accumulating a liability!
We have a fully automated system to charge the penalties by issue of an invoice (no VAT). New customers we often credit the first charge and from then they pay on time. Ironically Direct Debit has cost us tens of thousands in collected late payment penalties each year as it means most people don't pay late now.
Now, for various historical reasons we have a couple of very long standing customers who were set up not to charge the penalties. Some of them have finally started to change their organisation and move some services away - shame. But I have picked up on one recently and realised they owe well over £3500 of penalties. So we invoiced them.
The only snag is the Limitation Act 1980 which means you can't take legal action (court) if the cause of action is more than 6 years old. In this instance some of the late payments are more than 6 years old. Some are only last month! It seems FedEx habitually pay late, what can I say.
Now, they have realised that the Limitations Act may be an issue. But I am not convinced.
In this case the action would be a county court claim for an unpaid invoice and the cause of action is that we raised an invoice, this month, so well within 6 years. Yes, the cause of the invoice was more than 6 years ago, but the limitations act does not limit such things, and the statute just makes the penalties part of the contract.
I don't know - may be interesting to find out and see what a judge says.
It also has odd issues if it is the case - the debt exists, in contract, we are just barred from using court to enforce it. If ever we owe them for something I see no reason we cannot offset against the debt we have, effectively using that as enforcement instead of court.
It also has odd issues if it is the case - the debt exists, in contract, we are just barred from using court to enforce it. If ever we owe them for something I see no reason we cannot offset against the debt we have, effectively using that as enforcement instead of court.
Either way, it is well worth making sure you don't leave you late payment charges too long, just in case.
P.S. An evil thought - they have a few services still. If they pay money the terms are clear it goes against oldest unpaid debt. Even if unenforceable via a court it is a debt, so the payments go against the late payment penalties, and leave the current invoices unpaid. Those recent bills can be enforced by court. Hmmm. Evil thought.
P.S. An evil thought - they have a few services still. If they pay money the terms are clear it goes against oldest unpaid debt. Even if unenforceable via a court it is a debt, so the payments go against the late payment penalties, and leave the current invoices unpaid. Those recent bills can be enforced by court. Hmmm. Evil thought.
