Late Payment Fee

[taylorit]

Hello

We have a business to business contract where invoices are due to be paid a week after issue. One invoice was for £30, however on the day in question the Direct Debit bounced as an oversight funds were not transferred to the correct account, the invoice was duly paid by bank transfer the following morning after contacting the company. 2 weeks later that invoice has a late payment fee of £95 attached for the above forementioned. This has been paid, but a formal complaint immediately raised questioning the true losses do not amount to £95 and their fees are not shown within the contact.

11 weeks down the line the company have not provided a response or an update to address the complaint other than that is our terms and conditions.

We had a similar situation happen yesterday where DD failed as slightly short of funds in the account as a transfer didn't go through between accounts and wasn't picked up, invoice was immediately paid by bank transfer the same day it was due, however today a £95 late payment fee has been added to the account.

As far as I am concerned this late payment fee is actually a penalty and is excessive to the true losses sustained if any, they are not set out within the term & conditions, just reference a late payment fee. Looking at Late Payment of Commercial Debts (Interest) Act it appears it is excessive also.

Thoughts please? Am prepared to submit a claim in county court.

[PallasAthena]

We had a similar situation happen yesterday where DD failed as slightly short of funds in the account as a transfer didn't go through between accounts and wasn't picked up, invoice was immediately paid by bank transfer the same day it was due, however today a £95 late payment fee has been added to the account.

Sorry, can't help with your main question re excessive charges/penalties but regarding yesterday's situation how was it late if the payment went through on the correct day, albeit only after the DD request was submitted for the second time? Surely if payment was due yesterday and was made yesterday it was not late?

Unless their charge isn't for late payment but because their T&C allow them to make a charge for any bounced DD.

[taylorit]

EXTRACT FROM T&Cs

4. ACCOUNTS

Each week (or other period we have agreed with you in writing) we will send you an invoice, or produce an invoice on the Website, showing all purchases made using the Cards, less any credits or refunds. We may charge you if you require a paper or non-standard invoice. You must pay the invoice in full, by direct debit, within 7 days (or other period we have agreed with you in writing) of the date of the invoice (the Payment Due Date). We may charge you for non-standard payment methods or payment periods. If you do not pay any amount by the Payment Due Date we may charge interest at a rate of 5% over the National Westminster Bank Plc base rate. We work out interest on a day-to-day basis on any amount outstanding on the Payment Due Date (including unpaid interest) and also on any Goods and Services purchased by you with Cards but not yet invoiced to you until you pay the outstanding invoice in full. We may also charge you a late payment fee. Alternatively we may charge you interest and late payment fees in accordance with the Late Payment of Commercial Debts (Interest) Act 1988 and the Late Payment of Commercial Debts Regulations 2002 (or any amendments to these statutory provisions). We will continue to charge interest until you have paid the amount due, whether or not the Agreement has ended or a court judgment has been made. Late payment may also trigger a risk based fee being applied to your purchases (as set out in clause 8) and/or result in the removal of any discounts you may have the benefit of (as set out in clause 7). If any amount is still unpaid more than seven days after the Payment Due Date, we may cancel any or all of your Cards and end the Agreement (clause 13 of the Agreement applies to any Cards that we cancel). We may also place your Cards on temporary stop the day that any payment becomes overdue. We may apply an administration charge if we do not receive a payment because there is not enough money in your account to cover the direct debit or because you have cancelled the direct debit or if for any other reason that is not our fault we are unable to collect a payment due by direct debit. We will charge you a network service fee for processing all Card transactions. We may also charge for any copies of invoices or sales vouchers you ask us to send you for transactions. You agree that we are not obliged to carry out any investigations into, nor provide information in relation to nor copies of, invoices or sales vouchers dating back more than six months. We may charge you if you require us to provide any non-standard account management activities or for any non-standard services. We may charge if you wish to transfer your account to a different type of Card issued by us or terminate the Agreement and enter into a new Agreement with us under which we will issue a different type of Cards to you. We may charge for terminating or transferring your exiting account or for opening your new account, but not both. You must notify us promptly about any issue or dispute that relates to your Cards and Goods and Services purchased with Cards or Card numbers. We do not have to carry out any investigations that relate to transactions that took place more than three months before you notified us of a dispute.

[taylorit]

Hello

We have a business to business contract where invoices are due to be paid a week after issue. One invoice was for £30, however on the day in question the Direct Debit bounced as an oversight funds were not transferred to the correct account, the invoice was duly paid by bank transfer the following morning after contacting the company. 2 weeks later that invoice has a late payment fee of £95 attached for the above forementioned. This has been paid, but a formal complaint immediately raised questioning the true losses do not amount to £95 and their fees are not shown within the contact.

11 weeks down the line the company have not provided a response or an update to address the complaint other than that is our terms and conditions.

We had a similar situation happen yesterday where DD failed as slightly short of funds in the account as a transfer didn't go through between accounts and wasn't picked up, invoice was immediately paid by bank transfer the same day it was due, however today a £95 late payment fee has been added to the account.

As far as I am concerned this late payment fee is actually a penalty and is excessive to the true losses sustained if any, they are not set out within the term & conditions, just reference a late payment fee. Looking at Late Payment of Commercial Debts (Interest) Act it appears it is excessive also.

Thoughts please? Am prepared to submit a claim in county court.

Apparently if its paid any other method that by direct debit, they deem it as a late payment!

[PallasAthena]

Thanks.

I imagine they would also defend their charge on this T&C. Hopefully someone here will be able to comment on the reasonableness of that.

"We may apply an administration charge if we do not receive a payment because there is not enough money in your account to cover the direct debit or because you have cancelled the direct debit or if for any other reason that is not our fault we are unable to collect a payment due by direct debit."

[taylorit]

Thanks.

I imagine they would also defend their charge on this T&C. Hopefully someone here will be able to comment on the reasonableness of that.

"We may apply an administration charge if we do not receive a payment because there is not enough money in your account to cover the direct debit or because you have cancelled the direct debit or if for any other reason that is not our fault we are unable to collect a payment due by direct debit."

Thats what I suspect, however it is excessive to the invoice amount and does not amount to the true loss suffered if any.

[des8]

IMO although possibly legal an unspecified late payment fee is a tad unfair (but you had the opportunity to query this prior to signing)
For consumers late payment fees seem to be around £12 (Very, Barclaycard)
Welsh Water charge households £20, businesses £50

A court might decide a £95 charge is in fact excessive and disproportionate to their actual loss and find it is a penalty clause rather than a compensatory clause for actual damages.