VIC Late Payment Fee to Sole Trader Invoice?

[melanie87]

Hi all,
Does anyone know of the official and legal method under commercial law to add a late payment fee to an invoice? I am a sole trader and freelance worker. I'm unsure whether to create a new invoice number, or alter the current invoice and add an "R" for revised to the original invoice number. Do I change the issue date, and do I create a new due date?

Is there a general guideon what percentage of a fee should be added, after what period of time?

Many thanks!

 

[Rod]

Late payment fees need to be listed on your supplier terms of trade. If you have not told your customers you will add late payment fees then I don't think you can just add them because you are upset over late payments.

Do you have anything in your trading terms that talks about what happens if they don't pay by the due date?

If not, you need to send them a demand letter saying pay immediately or face extra costs and possibly be taken to court.

 

[melanie87]

Hi Rod, thanks for your reply. I'm aware of what you've mentioned, my terms say 'we reserve the right to charge a late payment fee for overdue invoices' - my query is more so in regards to how to construct the invoice (refer to first post).

 

[Rod]

Best to create a new invoice with the description of what it is and which invoice it relates to.

That way if they dispute the late fee it is no excuse not to pay the original amount. Generally best not to amend invoices unless the receiving party agrees to the amendment or there is an error.

 

[John R]

Hi @melanie87
Late payment fee clauses can vary by industry. The Victorian Government has a generic late payment clause example that you may consider as a starting point: Contracts for Fair Payments | Legislation & Regulations | Corporate Governance | Department of State Development, Business and Innovation

Hope this helps.