So your current clients are a little slack paying your invoices? How can you get your money quickly, fairly and legally?
Your Rights as an Employer Explained in Simple Terms
This area is covered by Common Contract Law, but if you want to be absolutely certain of the legality of your letter of engagement you would need to get independent legal advice. As an alternative to charging late fees, some people increase the charges on the original invoice but offer a discount if paid within certain terms. Of course you have the option to discontinue supply of goods or services until previous accounts are settled.
The Statutory Interest rate for loans as set by the ATO is currently 7.4%. Many service providers will charge interest on unpaid accounts at 2-3%, some will use the current ATO statutory rate, and others will charge up to 10%, as well as a late fee.
You are allowed to charge late fees and/or interest on your unpaid bills, if:
1. it is in the Terms and Conditions that the customer has already signed prior to you providing the product or service, and;
2. certainly it was known and agreed before any credit was extended to the client, and
3. so long as the charge is within what would be deemed “fair and reasonable” if it were brought in front of a magistrate.
What are some examples of fair and reasonable fees?
Scenario – $150 outstanding invoice for 90 days
Example #1
$150 outstanding invoice 10.5% at 90 days = $3.88 or 0.043 cents per day.
$150 outstanding invoice plus 10% late/administration fees = $15
Total of invoice now outstanding = $168.88.
Looks Fair & Reasonable
Example #2
$150 outstanding invoice 10.5% at 90 days = $3.88 or 0.043 cents per day.
$150 outstanding invoice plus $25 late fee.
Total of invoice now outstanding = $178.88
Looks Fair & Reasonable
Example #3
$150 outstanding invoice 10.5% at 90 days = $3.88 or 0.043 cents per day.
$150 outstanding invoice plus $50 late fee.
Total of invoice now outstanding = $203.88
May be considered Fair & Reasonable
Example #4
$150 outstanding invoice 10.5% at 90 days = $3.88 or 0.043 cents per day.
$150 outstanding invoice plus $200 late fee.
Total of invoice now outstanding = $353.88
Not so Fair & Reasonable!
What is the best way to get my invoices paid?
Take the stress out of chasing your clients that have overdue invoices. Let SJ Bookkeeping handle your overdue accounts and set an overdue fee and reclaim the monies that are rightfully yours.
Call our team today and we will be on site to arrange your books tomorrow.