Passing on finance costs

[Ra5ax]

Very quick one but, say you have had to engage unexpected financing due to a non payment from a client, or late payment, can you subsequently pass on those costs for the interest paid? Our client is refusing to pay until they get paid which was not the original agreement, it has gone on so long now that we had to take out financing in the form of loans to prevent the business going into administration, these loans were short term but are costing increasingly more the longer this continues, I believe there will be atleast a small claims hearing on this project but I would like to attempt to pass on the cost of financing, if we advise the customer of this now would we be in a position to claim this through the court once the hearing is heard or am I being a little too hopeful? It's not in our original contract or terms and conditions but then neither party have agreed or disagreed a formal written contract and we have purely quoted and received a PO to which we completed the works.

 

[Scalloway]

The legalities of charging interest on late commercial payments

https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt

 

[Ra5ax]

Thank you that's very useful, so in theory I can charge interest but I can't charge out as an actual cost,

Cheers

 

[Ian J]

Thank you that's very useful, so in theory I can charge interest but I can't charge out as an actual cost,

True. I hope that others reading this will learn the very valuable lesson of using proper terms and conditions, especially in businesses like yours that aren't straightforward sale of product

 

[Ra5ax]

I can't vouch for that enough, learn from our errors we grew way too fast and took on large works before our back office was ready. What ever you do get the paperwork in place no matter how tempting g or trusting you are, it's cost us 15k and that's hard to swallow as a new business, fortunately we have enough work to get out of it but it could have very nearly closed our business. Contracts are a must and if there's one thing I've learnt this past year when starting a business be firm and stick to your guns especially b2b they try to push you but any customer worth having will understand your situation.