Should Late Payment of Invoices Carry An interest Penalty

While the protesters continue to make their presence felt outside St Paul's Cathedral in London regarding what they call corporate greed. The case of the Hearts Football players receiving late salary payments has also hit the headlines. Many of the players are frustrated. The BBC has reported that their October salaries where 16 days late while the November salaries were 29 days late. There is something not quite right when the corporate world invades the world of sport and seeks to make sport into a business. All this got me thinking about the injustices that are happening in our communities and are often not being addressed be it in Scotland, England or Northern Ireland. Could it be that the salaries of footballers are too high in any case? (I can never quite get my head round the fact that ordinary working people on small salaries or weekly wages go to watch football matches and pay large amounts for tickets to watch football that is often way below a good standard). Anyway a contract is a contract and if players have been promised an amount then they are due that amount, regardless what you think of the law that seeks to enforce the principle. For me the interesting thing that has not been mentioned is that the Hearts players may be liable for extra payments due to the late payment of their salaries. I wonder how many people know that there is a European directive to government departments which highlights the importance of paying bills on time. Recently I discovered that Government bodies are duty bound to pay interest on the late payment of their bills and invoices,in the same way that an individual has to pay interest on the late payment of tax. I'm sure there must be a number of companies up and down the land who could benefit from knowing about this information especially if they are doing work for the government. However I think the law just applies to Government bodies like Health Boards etc. However I'm sure it might be helpful to all small businessess if a similar law was passed instructing all sectors to pay their invoices promptly. I'm certain it would help a lot of small to medium size businesses. Let me know what you think.
6 Comments
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Posted By: i_watch   On: 29 Dec 2011   At: 7:37pm

italker,

Seems Altoman has confirmed the Late Payment you mentioned is/was a problem for his business. Since we have Health Boards in Scotland I “googled” and yes N Irland has Health Trusts in fact 6 of them. 

 

I’m sure Health Boards always pay their bills on time.

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Posted By: Stephen McCarroll   On: 28 Dec 2011   At: 10:28am

“Unfortunately the business world is full of injustices”.

When Jesus was asked is it lawful to pay taxes to Caesar (Matt 22), he replied “Render on to Caesar the things that are Caesar’s”. I once asked an employee of HMRC why I should render on to Caesar when Caesar doesn’t render on to me? As the owner of a small business which trades exclusively with HM Government I thought it was an important question. I wasn’t being paid by the the Health Trusts that I was supplying, therefore giving me a cashflow problem. In order to satisfy the render on to Caesar bit I had to borrow from the bank. Another injustice!

Altoman

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Posted By: The Alligator   On: 26 Dec 2011   At: 11:05am

italker

Interesting comments regarding payments. Unfortunately the business world is full injustices.

 

The big question is, how many problems could be solved by large organisations setting an example and paying on time.

 

Resolve this issue at the top and the idea of paying on time could then filter down through the business community.

 

The Alligator

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Posted By: Ian Houston   On: 25 Dec 2011   At: 1:09pm

Not under the EU Directive for that for businesses who trade with other businesses inclding Government Departments, Local Authorities and NHS Trusts etc.In N Ireland we have HSC Trusts. 

Back to the Hearts players they will have to seek a different remedy if they are not getting paid. I am sure there must be someone in Edinburgh who knows the name of a legal firm who deals in such matters.

 

Mind you if suppliers of the club are not being paid within the payment term agreed they have the right to pursue statutory interest for each late paid invoice and the compensation I mentioned follows.

 

Better still past supplier also have an opportunity to claim for all their late paid invoices but only for the last 5 years. If it was a footbal club a business or even an HSC Trust in N Ireland it would be 6 years.

 

Mind you if the business t/a Hearts has gone through changes they have had the chance to leave the debts behind with any new start…phoenix!!

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Posted By: italker   On: 25 Dec 2011   At: 12:47am

So does this mean that the Hearts footballers have an interest claim against their employers as well as a compensation claim?

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Posted By: Ian Houston   On: 25 Dec 2011   At: 12:44am

Hi Albert

A while since we spoke but I do pay the odd “virtual” visit. I actually enjoyed the recent concert what a group of talented musicians and you were bad either.

Seeing those stained windows again took me back a bit… I was always taken by them particularly during those awful sermons but I was young then and I didn’t really want to be there. Anyway that was then well over 40 years ago and this is now ....and like Santa I have a flowing beard just mine is not quite as white but hopefully by next year my health and the good lord willing it will let be and then he may let me be one of his not so little helpers.

By the way I read your post on the question of Interest and particularly interest based on the European Directive.

You are absolutely right to say there is a penalty for the late payment of business invoices. You are also right when you say it applies to government departments, and Health Bodies but it also applies to local and/or public authorities.  What all lot of people have missed in all the time since this directive became law is these bodies are included in one of the subsections Act which tells what a business is for the purposes of the Act. So the Directive does cover all businesses. Just one wee extra point when you get interest you also can claim something else and that is compensation that just depends on the invoice amount that was paid late.

I hope this news helps brings Christmas Cheer to somebody and I am sorry if it is uncomfortable news for others.  Then again if bad payers learn its better to be good payer that would be good for all businesses. It really is a mirror of life all sin has a price or something!! The real challenge with this type of legislation of course is how the Late Payer reacts when the supplier makes the claims and how the relationship changes thereafter.  As you know its always in the bible only if you don’t pick up how will you know what’s inside? The same applies here read the actual legislation ..its only a few pages long and there’s not too many big words.

I always did like the tale of David and Goliath. This Directive can be a very effective sling if you know how to fire it.

Anyway just one final thing like before I dash like many others with a St Andrews connection I will be proud in 2012 to say ” that’s our Albert he’s the Moderator you know”.

All Christmas Greetings and have a Happy New Year and may 2012 bring all who view your blog happiness and joy and a lot less late payments.

God Bless

Your friend

Ian

If I’m out “virtual” first footing on Hogmanay I may call again just after the bells.

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