I finally got a very late invoice paid… they have asked me to cancel the invoice for interest/late payment charges. Do I ask for payment or leave it?

Navigating Late Payments: Should You Pursue Interest Charges?

Dealing with late invoices is never pleasant, but it’s a situation many freelancers and small business owners face. Recently, I experienced a frustrating scenario where a client delayed payment by several months, amounting to over £10,000. Despite my persistent follow-ups and providing evidence of completed work, they paid late and reluctantly agreed to a payment plan.

A Client’s Delayed Payments

The client, a smaller business with ample cash flow, initially claimed issues with my invoices. However, these queries quickly vanished once I presented clear proof of service. Interestingly, they managed to pay other contractors on time, leading me to believe my payments were intentionally deprioritized.

While the client met the first month’s payment under the new plan, the final installment was missed. I had been considerate enough to offer waiving late payment fees and interest if they adhered to the agreed schedule. When they failed to meet the August deadline, I issued an additional invoice for over £500 covering late fees, in accordance with HMRC guidelines. Their response was silence until the payment trickled in 10 days late.

The Dilemma: To Waive or Not to Waive?

Now, the client has requested that I cancel the invoice for the late payment fees. Understandably, I’m torn between letting it go or pursuing the amount I am rightfully owed. As advised by many, there’s wisdom in not confusing a technical win with actually achieving what you desire.

Potential Next Steps

Seeking advice from peers and legal resources, some have suggested issuing a statutory demand for the interest, which I had already prepared. However, I also offered a compromise to the client: a discount if they settle within seven days. Should this go unpaid, I might consider classifying it as bad debt for accounting purposes and disengaging professionally with them moving forward.

Conclusion: Professional and Personal Boundaries

This experience emphasizes the importance of setting firm boundaries with clients, especially regarding payments and professional integrity. Despite the frustration, I have learned valuable lessons about safeguarding my interests without escalating negativity. Going forward, this relationship has shown me not to compromise my principles or let professional missteps slide.

Have any other professionals faced similar situations? I’d love to hear your experiences and how you navigated such challenges.

1 Comment

  1. bdadmin

    Reply

    It sounds like you’ve navigated a complex situation with patience and persistence, which is commendable. The scenario you’ve described is unfortunately not uncommon in business, especially when dealing with clients who prioritize their own cash flow over contractual obligations. Here’s a structured approach to consider, balancing practical advice with professional insight:

    1. Principle vs. Practicality: It’s crucial to weigh the principle of the situation against the practical implications. Recovering the interest charges is within your rights and can establish a precedent for how you expect to be treated by clients. However, pursuing this could lead to further friction and may not be cost-effective in terms of time and resources, especially if litigation becomes involved.

    2. Legal Position: You are legally entitled to the interest and late payment fees as per the terms you outlined. Given they missed the payment plan deadlines, your position is supported legally. You might consider consulting with a legal professional to get clear advice tailored to your jurisdiction, particularly concerning the issuance of a statutory demand.

    3. Negotiation and Future Proofing: Consider reaching out to them one final time with a formal letter outlining your position. You could offer a compromise, such as a reduced fee if paid within a very short timeframe, as you’ve started to explore. This can demonstrate goodwill and professionalism, which might be valuable should you encounter similar situations in the future.

    4. Financial Consideration: Weigh the financial implications against your business needs. If pursuing the fees legally would incur costs that outweigh the recovery amount, it might not be financially prudent. Furthermore, consider how writing off the amount might impact your financial statements and potential tax implications.

    5. Reputational Consideration: Your professional reputation is important. Providing a firm but fair response could enhance your standing in your industry. It demonstrates that you can enforce your rights without resorting to unnecessary confrontation.

    6. Reflect and Learn: Use this experience to refine your client contracts and payment terms. Consider including clauses that emphasize timely payments and consequences for delays, and setup a more immediate follow-up structure for outstanding payments. Additionally, this experience can inform the red flags to watch for in future client engagements.

    7. Move On Strategically: Sometimes, moving on with goodwill can be advantageous. Ensure this decision aligns with your long-term business strategy and preserves your peace of mind.

    Ultimately, the decision rests on striking a balance between enforcing your rights and maintaining a pragmatically beneficial business position. Although it

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