When are invoices actually paid?

[phillipsinternet]

Hi all,

I have a question about invoice due date - a bit new to all this still so bear with me.

I've issued some invoices which were/are all due this week (Monday, Tuesday and Thursday). As of this morning no funds have appeared in my online banking interface, so I'm wondering if this counts as late payment, or because BACS takes 3-5 days to clear is there still a couple of days in hand before I need to start chasing?

If the final payment date for an invoice is say, the 10th, then does the money have to be cleared in my account on the 10th, or do they just have to start the BACS process and it's ok if the funds appear on the 12th?

Thanks in advance,

Jon

 

[semsley]

Just because you have a due date on your invoice, doesn't mean it will be cleared in your bank on that date.

The customer may write the cheque that day, stick it in the post, you receive it, pay it in - could be over a week.

Or by bacs as you say anything from 3 -5 days from customer requesting transfer of funds to you receiving them.

Personally I wouldn't chase a payment the day according to your t & c it is due.

 

[MyAccountantOnline]

Hi all,

I have a question about invoice due date - a bit new to all this still so bear with me.

I've issued some invoices which were/are all due this week (Monday, Tuesday and Thursday). As of this morning no funds have appeared in my online banking interface, so I'm wondering if this counts as late payment, or because BACS takes 3-5 days to clear is there still a couple of days in hand before I need to start chasing?

If the final payment date for an invoice is say, the 10th, then does the money have to be cleared in my account on the 10th, or do they just have to start the BACS process and it's ok if the funds appear on the 12th?

Thanks in advance,

Jon

If a customer is paying by BACS I would say it is late if its not in your account by the invoice due date - thats certainly the way HMRC work for tax payments.

Do bear in mind that most internet/bank transfers are made now using faster payment so generally show in 2 hours.

 

[phillipsinternet]

Ok thanks for the advice, I'll leave it until the BACS period is definitely up to chase.

I suppose it's perfectly alright for me to change my T&Cs for future contracts to say that cleared funds are due 30 days from invoice date?

Thanks again!

 

[phillipsinternet]

If a customer is paying by BACS I would say it is late if its not in your account by the invoice due date - thats certainly the way HMRC work for tax payments.

Do bear in mind that most internet/bank transfers are made now using faster payment so generally show in 2 hours.

Hmm ok, thanks Nicola. Can anyone else weigh in on the subject, I'm confused now :|

 

[MyAccountantOnline]

I suppose it's perfectly alright for me to change my T&Cs for future contracts to say that cleared funds are due 30 days from invoice date?

Thanks again!

Absolutely - do you really want to give 30 days credit?

 

[MyAccountantOnline]

Hmm ok, thanks Nicola. Can anyone else weigh in on the subject, I'm confused now :|

Faster banking has been in existence for some time now - if someone pays you using internet banking it really should show in your account within 2 hours. If you Google 'faster payment' you'll find more info. It means the old excuses for late payments go out of the window

 

[semsley]

Do bear in mind that most internet/bank transfers are made now using faster payment so generally show in 2 hours.

I've found that with the faster pay I can go to the bank to pay money in and by the time I get back and check on IB it's there, I can make a payment and it's there. However, I get bacs remittance advices from customers and the money still takes 2-5 days to arrive. What's all that about?

 

[GRDCredit]

Hmm ok, thanks Nicola. Can anyone else weigh in on the subject, I'm confused now :|

I am not sure what you are confused about!

If your terms say payment is due on the 10th that is when payment should be in your account. Your client should know if BACS take 48 hours and therefore make payment 48 hours before due date.

 

[Geoff T]

Bit of a simple question - but have you spoken to the customer?

As previously suggested, some businesses start the chase process from due date, others like to leave it a few days...

The easiest way to know for sure if you should be expecting money into your bank would be to call the customers who owe on the invoices...

If done the right way - it needn't be heavy or a "chase" call as such, almost a courtesy call...

There are some who advocate calling before the due date - which allows you to pro-actively resolve any queries that may arise...

 

[phillipsinternet]

Thanks for all the responses,

I have been in touch with them this week, each time told that the invoices had been passed to the accounts dept. and once told that the payments were being made that day.

So I guess if i don't see them in IB then they haven't been made, although we're with Abbey and I've found references to Fast Payments not working properly with them sometimes, not sure if that's incoming or outgoing though.

I'm on fairly good terms with the project manager there so I'll send him a quick email and ask him to confirm that the payments have been made.

Thanks for the help, hopefully I won't be back soon asking about debt collection advice (Small claims court and late payment legislation I presume?)

Jon

 

[Geoff T]

Jon, don't contact the project manager - call the accounts dept - they're the ones who will know for sure if and when your payment was sent - and how...

 

[GRDCredit]

There are some who advocate calling before the due date - which allows you to pro-actively resolve any queries that may arise...

Who's that then

 

[Geoff T]

Who's that then

You can't be so bored you want to re-hash THAT old chestnut!!!

You know who you are - as well as I do

 

[InternetMarketingPlatinum]

Just because you have a due date on your invoice, doesn't mean it will be cleared in your bank on that date.

The customer may write the cheque that day, stick it in the post, you receive it, pay it in - could be over a week.

Or by bacs as you say anything from 3 -5 days from customer requesting transfer of funds to you receiving them.

Personally I wouldn't chase a payment the day according to your t & c it is due.

Over a week? That's nonsense. He would be getting into very bad habits if you advised him to only start chasing debts over a week after due.

 

[saxondale]

Over a week? That's nonsense. He would be getting into very bad habits if you advised him to only start chasing debts over a week after due.

quite correct too - leave it at least a month ................ players

 

[Spongebob]

Hi all,

I have a question about invoice due date - a bit new to all this still so bear with me.

I've issued some invoices which were/are all due this week (Monday, Tuesday and Thursday). As of this morning no funds have appeared in my online banking interface, so I'm wondering if this counts as late payment, or because BACS takes 3-5 days to clear is there still a couple of days in hand before I need to start chasing?

If the final payment date for an invoice is say, the 10th, then does the money have to be cleared in my account on the 10th, or do they just have to start the BACS process and it's ok if the funds appear on the 12th?

Thanks in advance,

Jon

Whatever terms you print on your invoices, a sizeable proportion of customers will not take a blind bit of notice; they will pay you when you theaten them sufficiently, or when they need more services from you.

Twas ever thus, and it is why I no longer offer credit to anyone, stipulating payment upon delivery.

I recommend you do the same. It will save you a lot of stress.

 

[JEREMY HAWKE]

Its worth pointing out that not everybody pays on the date due.For example I tend to make payments every two weeks on a Thursday some invoices will be early some will late but it is unreasonable to expect companies to pay invoices as they become due exactly .You would spend all your time checking to find out what needs paying each day.

Bob has the best idea payment up front !!!

 

As previously posted, you will be very hopeful expecting payment on a due date - but it's still a good goal to set..

You might want to download our free Guide to Credit Control for SMEs from our website - hopefully it will give some useful pointers.

 

[Ian J]

Who's that then

I know of a substantial stationery wholesaler where the credit controllers were instructed to phone a week before the due date to ensure that the correct payment was in the system and would be paid on time.

Unfortunately very few companies have the muscle to be able to operate like that