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Has anyone had any success in applying Directive 2000/35/EC on combating late payment?
Thread poster: Jana Teteris

Jana Teteris  Identity Verified
United Kingdom
Local time: 08:11
Latvian to English
+ ...
Oct 27, 2005

I am interested in knowing whether anyone has had any success in applying Directive 2000/35/EC on combating late payment in commercial transactions.

In a nutshell, I always experience delays in receiving payments from one of my major clients. Whilst they have always paid (eventually) I find myself chasing them up every month, and am getting somewhat fed up with having to do so. I have asked them on a number of occasions to let me know their payment procedures, but have received no reply. So today I told them that I am entitled to start charging interest, but will refrain from doing so if they can guarantee that payments will be made within 30 days. Am I being too optimistic?



[Edited at 2005-10-27 14:25]


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xxxalbertov
Arabic to Spanish
+ ...
Payment in advance Oct 27, 2005

Jana Teteris wrote:

I am interested in knowing whether anyone has had any success in applying Directive 2000/35/EC on combating late payment in commercial transactions.

In a nutshell, I always experience delays in receiving payments from one of my major clients. Whilst they have always paid (eventually) I find myself chasing them up every month, and am getting somewhat fed up with having to do so. I have asked them on a number of occasions to let me know their payment procedures, but have received no reply. So today I told them that I am entitled to start charging interest, but will refrain from doing so if they can guarantee that payments will be made within 30 days. Am I being too optimistic?



[Edited at 2005-10-27 14:25]
Maybe this is a bit...


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Sven Petersson  Identity Verified
Sweden
Local time: 09:11
English to Swedish
+ ...
Yes Oct 27, 2005

I specify 14 days in my quotations and a charge of SEK 45.00 for every reminder and 10% interest p.a.

They pay.


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Burrell  Identity Verified
United Kingdom
Local time: 08:11
Member (2004)
English to Latvian
+ ...
Just a tiny bit Oct 27, 2005

The moment you tell the client he will have to pay interest on late payment you accept that you might have to loose him at all. What if the client will not pay the late payment fees? Are you just going to chase him again? No, you will have to admit that enough is enough, otherwise the client will think you are just a joke.
Basically, if the client wants to keep you, he will have to pay in time or pay the late payment fees. If he does not value you, he will not pay, in which case you might be better off without him anyhow. But you know that already.

Cheers,
Burrell


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RWSTranslation
Germany
Local time: 09:11
Member (2007)
German to English
+ ...
No Oct 27, 2005

Hello

A possible solution:
Give a discount for early payment.

With kind regards

Hans

[Edited at 2005-10-27 18:26]


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Susana Galilea  Identity Verified
United States
Local time: 02:11
English to Spanish
+ ...
how long is too long? Oct 27, 2005

Jana Teteris wrote:
Am I being too optimistic?


I don't know about "optimistic", but I would advise you to be cautious. You mention this is a major client of yours: how is the professional relationship aside from the delays in payment? how long a delay are we talking about? would you be willing to risk losing this client?

As other colleagues have mentioned, while you are at liberty to enforce your payment schedule, there is no guarantee the client will comply. I would think carefully before risking compromising a relationship with a major client. Obviously, it would be different if this was a non-payer, but you say they do pay eventually. Perhaps, instead of asking about their payment practices, you could bring this concern to their attention and ask them for an agreement regarding what payment terms they would be comfortable with. Make sure they understand it is important for you to know when you can expect payment.

That said, this is a situation that would have best been addressed from the beginning. My payment terms are spelled out in my translation agreement and in my invoices, and I will often point them out to new clients when I issue my first invoice. If they are late with their first payment, I will inquire about the delay, and mention again my terms as a reminder. If the delays continue, I will bring up the issue and offer to discuss payment terms both parties can live with. I am willing to be flexible as long as the alternate terms are complied with. Again, it would depend on how long a delay you are referring to, but I would not compromise an otherwise satisfying work relationship without trying my best to find a common ground.

As for late payment fees, it's a very personal business decision, and the popularity/efficiency of the practice varies by country as well. Again, you yourself need to decide the terms of your business, it is not up to your clients to impose those on you.

Best luck making a decision, and let us know what develops.

Susana Galilea
Accredited Translator, English into Spanish
sgalilea@ispwest.com
www.accentonspanish.com


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PCovs
Denmark
Local time: 09:11
Member (2003)
English to Danish
+ ...
I only enforce in on a few clients. Oct 27, 2005

I have enforced it on a few clients only, but they also needed a good kick in the b** ;o)

One client also always pays eventually, and this has become so annoying now that I have started to enforce this - although I "only" charge 7%.
This client also pays this charge without even questioning it.

The other client did make a fuss the first time I charged this rate, and for that time only I agreed not to charge it anyway, but I informed them that I would indeed be charging it, since both our countries are members of the EU etc. And I have saved a copy of the text on my computer, which I - naturally - forwarded to this client.

I have made sure to notify them first even before mentioning it on my invoices, and thereby long before I actually had to charge this rate. But now, for this client, it really seems to be working.

Mind you, the latter is a major client of mine, and I only enforced the charge after having tried to come to another agreement.

I agree that you should be very careful, but I also believe that you should not let the client simply walk all over you by deciding when to pay, if at all!


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Jana Teteris  Identity Verified
United Kingdom
Local time: 08:11
Latvian to English
+ ...
TOPIC STARTER
Thanks for the advice Oct 27, 2005

Thank you for all your helpful comments. I don't want to risk losing this client, especially as the working relationship with the project managers is very good and I've been working for them for almost 2 years. These payment delays have really only started becoming a problem in the last 6 months, so I assume that the person responsible for payments is simply disorganised.

Anyway, to cut a long story short, I sent them an e-mail saying that I won't be charging interest if they guarantee that any future invoices are paid within 30 days - to which I received a very sympathetic reply from one of the project managers, and nothing from the accounts office


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langnet  Identity Verified
Italy
Local time: 09:11
Member (2002)
Italian to German
+ ...
Wouldn't recommend that.... Oct 28, 2005

DSC wrote:

Hello

A possible solution:
Give a discount for early payment.

With kind regards

Hans

[Edited at 2005-10-27 18:26]


... I tried this very "German way" of payment here in Italy. Result: delayed payments as usual, BUT, of course, with "Skontoabzug"...

[Edited at 2005-10-28 02:52]


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Heinrich Pesch  Identity Verified
Finland
Local time: 10:11
Member (2003)
Finnish to German
+ ...
I too have such a client Oct 28, 2005

Though he told me, how his bookkeeping works, when the invoice should be send and when they pay their bills, he is alwas late. On two occasions I had to decline to work for him unless I get paid the old jobs first. When he noticed I was serious he paid. Now I'm in the same situation again.
Regards
Heinrich


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#41698 (LSF)
Malaysia
Local time: 15:11
Japanese to English
+ ...
That's funny Oct 28, 2005

I had substantial income from Japan, USA, and Singapore but the late payments were from clients in EU countries. And as far as I'm aware of, these other countries don't have such directives.

Though I may get my payments some 60 days after invoicing in these other countries, it was usually due to payment cutoff date (which they specify upfront) rather than late payment.

And, I think the 30 days in the directive starts from due date not invoicing date.


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PCovs
Denmark
Local time: 09:11
Member (2003)
English to Danish
+ ...
30 days after receipt of invoice. Oct 28, 2005

Lew Shiong Fong wrote:

And, I think the 30 days in the directive starts from due date not invoicing date.


"1. Member States shall ensure that:
(a) interest in accordance with point (d) shall become payable from the day following the date or the end of the period for payment fixed in the contract;
(b) if the date or period for payment is not fixed in the contract, interest shall become payable automatically without the necessity of a reminder:
(i) 30 days following the date of receipt by the debtor of the invoice or an equivalent request for payment; or..."


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#41698 (LSF)
Malaysia
Local time: 15:11
Japanese to English
+ ...
Due date varies Oct 28, 2005

(i) 30 days following the date of receipt by the debtor of the invoice or an equivalent request for payment; or..."


Payment period (http://europa.eu.int/comm/enterprise/newapproach/index.htm)

The Directive will give a benchmark of 30 days as a payment period which mainly refers to payment delays. This 30 days reference period runs from the date on which payment is due (i.e. after the period between the dates when the contract is concluded and the payment is due)., which is the date of receipt of the invoice or at the date of receipt of the goods. In cases where the parties have agreed a procedure for acceptance or verification of the goods, it starts after this process has been completed.

SMEs will benefit from a statutory right to interest 30 days after the date of the invoice, unless another payment period has been negotiated in the contract. However, any agreement on the payment period is not enforceable if it is grossly unfair to the creditor. No reminder will be necessary in order to collect interest on arrears since late payment constitutes in itself a breach of contract that should be automatically sanctioned. For certain categories of contract, Member States will be able to fix a period of 60 instead of 30 calendar days after which interest will become due. However, if they choose to do so, they will have to prevent the parties from exceeding this delay, i.e. it will take precedence over contractual payment periods. This will combat long contractual payment periods, which are customary in certain sectors.

Penalty interest


Actual subpage is at http://europa.eu.int/comm/enterprise/regulation/late_payments/index.htm


[Edited at 2005-10-28 09:18]


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Anjo Sterringa  Identity Verified
Spain
Local time: 09:11
Member (2003)
English to Dutch
+ ...
Due date varies, depends on agreement Oct 28, 2005

The EU Directive is not 'direct', you'll have to check the implementation of the Directive in each country.
http://europa.eu.int/comm/enterprise/regulation/late_payments/implementation.htm

Some countries will allow for a payment term of 60 days though, and the 30 days term only applies if no other term was agreed on in the Agreement. In practice, a payment term of 30 days means you will get the payment in about 35-60 day.

If I look at my client's payments, it varies between being almost on time and paying two months late (in summer). As long as I know I am going to get paid, I do not bother trying to get the few extra Euros penalty out of them. The statutory interest rate is 7 percent points above ECB rate (but in UK Bank of England dealing rate http://europa.eu.int/comm/enterprise/regulation/late_payments/interest_rates.htm), now 9.05% (2.05% + 7%) unless you state another % in your terms and conditions. That is annually, so if your €700 invoice's payment is 30 days late (AFTER the invoicing term or 30/60 days), they should pay you €5.30 extra. Not worth spending my time on...

I would be very careful though if a client (translation agency) suddenly starts paying late. Check the Blue Board, there are a few out there that have apparently run into cash-flow problems. No penalty interest could help you there....


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Isabelle Gelle

Local time: 08:11
English to French
+ ...
A European disease Dec 16, 2005

Lew Shiong Fong wrote:

I had substantial income from Japan, USA, and Singapore but the late payments were from clients in EU countries. And as far as I'm aware of, these other countries don't have such directives.

Though I may get my payments some 60 days after invoicing in these other countries, it was usually due to payment cutoff date (which they specify upfront) rather than late payment.

And, I think the 30 days in the directive starts from due date not invoicing date.



Yes I agree that we only seem to get this problem from European companies!! Which shows that good business is not related to laws but to trust and ethics....

European companies are increasingly becoming bad or late payers because they are overloaded with red tape from the Eurocracy and because, let's be honest, the European economy is depressed...


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