Whenever your customers cannot pay in due time, you should ensure they\u2019re aware of the consequences. Under normal conditions, if you buy from somewhere services or goods and don\u2019t pay up, it\u2019s considered taking a loan. I say \u201cnormal conditions\u201d since it\u2019s assumed you haven\u2019t bargained for special treatment, i.e. longer payment terms for an example.\u00a0<\/p>\n
So, what happens if you take a loan? You\u2019re expected to pay for the usage of the money. You\u2019re using essentially someone else\u2019s money for an extended period and in this case for a period not initially even intended by the moneylender.<\/p>\n
This something that you\u2019re expected to pay for the usage is called \u201cinterest\u201d. Just the same as loans are earning interest to the lender, so should do overdue receivables.<\/p>\n
The best way to enforce interest on overdue receivables is letting the customer know of it by adding this information already on the invoice itself. It can be in the form of a simple sentence saying that overdue balances exceeding the payment deadline shall be applied an interest of a determined %. Note here that this interest is actually per day and not per annum, so using like 5% isn\u2019t all that sensible. Normally the rates are somewhere around 0.5-0.7% per day. It\u2019s not expected to be cheap since as I mentioned before, it wasn\u2019t the initial assumption of the seller that they won\u2019t get their money. They\u2019re \u201cforced\u201d into lending and thus the interest, if you\u2019d apply this for the whole year, would yield into a very expensive loan.\u00a0\u00a0Maybe consider taking an overdraft to pay up? An overdraft from a bank is a lot cheaper.<\/p>\n","protected":false},"excerpt":{"rendered":"
Whenever your customers cannot pay in due time, you should ensure they\u2019re aware of the consequences. Under normal conditions, if you buy from somewhere services or goods and don\u2019t pay up, it\u2019s considered taking a loan. I say \u201cnormal conditions\u201d since it\u2019s assumed you haven\u2019t bargained for special treatment, i.e. longer payment terms for an […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[78],"tags":[],"class_list":["post-5024","post","type-post","status-publish","format-standard","hentry","category-2-8-revenue-and-receivables"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=5024"}],"version-history":[{"count":1,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5024\/revisions"}],"predecessor-version":[{"id":5025,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5024\/revisions\/5025"}],"wp:attachment":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=5024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=5024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=5024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}