Invoices - Late % Penalty Charges & Revised Terms

Discussion in 'Accounting and Taxes' started by Ripley, Oct 20, 2016.

  1. Ripley

    Ripley
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    I require some advice in respect of invoices.

    I have a client who has failed to pay an invoice within the agreed terms and are also failing to respond to all communication. I have issued a warning that the invoice is liable for Late Payment % charges and that this will also now be due.

    Within my terms, I also have an agreed clause that failure to pay the invoice within the agreed terms, 15days, that this invoice can be re-calculated at our full rate.

    As I have had no response again, I now need to issue the first of the new invoices with the % late payment charge added. (And should this not work, I will use the right as per our terms to charge at our full rate, which is considerably more. I am hoping the threat of this will make the client pay.)

    My query is around how to invoice bot the % for late payment and should it arise the re-calculated amount?

    Do I credit the original invoice and issue a new invoice? Do I send an invoice for the added % charge? And similarly with the extreme case, how do I invoice at the penalty rate agreed in our terms? Do I credit all the invoices to date and issue the new one? I have no idea which is best to do? Is it a case with all the invoices I also illustrate; Charge, VAT, Late % penalty, Breach of terms etc. then show a new calculated bill?

    Hopefully someone can assist..
     
  2. eXCel

    eXCel
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    Hi Ripley,

    It sounds like you are using accounting software to do your invoicing. If that's the case, then how you invoice for the late payment charge depends on the software. Some software will allow you to add the late fee and reissue the invoice. Others will require you to create a statement and apply the fee to the statement balance. You usually would not close out the original invoice or create a new one. If the process is not outlined in your software documentation, consider searching the user forum for your particular software.

    If you're not using accounting software, you can simply revise your invoice to include the late payment charge and mark it as revised. You can put something to the effect of "Second Notice - late charges applied" so your customer is aware of it.

    Same thing with the rate recalculation. You can invoice it as an additional penalty fee just like the late payment charge. Good luck with your invoicing.
     

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