Late Payments Procedure

Introduction

At CyPro, we strive for absolute transparency in how we operate with a view to maintaining a positive working relationship with our clients. Late payments for invoices can happen due to unforeseen circumstances such as IT system disruption, staff illness, etc. but timely payment for our services is crucial to our operations.

This document outlines the steps we take if payment is not received within the agreed-upon payment terms.

Why?

1. Transparency – we want to have a standard approach to collecting our fees, which removes the emotion from the process. This procedure ensures all our clients are made aware of the process before any services are provided.
2. All Clients Treated The Same – having a standardised process means we adopt the same process irrespective of who you are. It enables fairness for all our client base. This protects both our business and the interests of our clients.
3. Healthy Business – in order for us to keep our people employed and maintain a healthy and viable business, we need to operate a formal process for retrieving unpaid fees. Not only is it good practice, it is fundamental to our financial stability.

Our Procedure

There are 4 phases to our Late Payments Procedure, based on how late the payment is;

1. 2 Weeks Late
2. 4 Weeks Late
3. 6 Weeks Late
4. 10+ Weeks Late

Different measures are taken at each phase. Each measure is explained in more detail below.

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2 Weeks Late

Step 1: Friendly Reminder

We understand that sometimes payments can be overlooked. If your payment is 1-2 weeks late, we will send a friendly reminder via email or phone call. This reminder will include details of the outstanding invoice and a polite request for prompt payment.

It will also include a link to this procedure to ensure your accounts payable department are aware of the process. 

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4 Weeks Late

 Step 2: Formal Request

If payment is not received after the initial reminder, we will send a formal request for payment from a practice partner via email. This communication will be more structured and will reiterate the importance of settling the outstanding amount promptly and any legal and financial penalties that may arise.

Step 3: Late Fees Commence

At this stage, late fees will be applied as per our payment terms. The introduction of late fees often serves as one of the most persuasive incentives to settle the outstanding balance quickly.

Late Fees are back dated to the first day that the invoice is late and invoices will be sent fortnightly as separate, new invoices.

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6 Weeks Late

Step 4: Service Suspension

If an invoice is 6 weeks overdue and there is ongoing work, we will need to temporarily ‘down tools’ on the project(s) and cease all ongoing work until the outstanding balance is paid.

Project milestones will need to be re-baselined and team members will need to be offboarded. Depending on how long the project is suspended for, they may be reallocated and lost to that project causing further disruption and delays.

This measure helps prevent further financial strain on our operations and highlights the gravitas of the outstanding payment.

Step 5: Letter Before Action (LBA)

If after 1 week of suspending services (or the project is complete and payment is now 7 weeks late), we will issue a Letter Before Action (LBA). This letter formally demands payment of the outstanding amount and warns that we will take legal action if payment is not made within a specified period (usually 14 days).

This letter formally demands payment of the outstanding amount and warns that you will take legal action if payment is not made within 2 weeks.

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10+ Weeks Late

Step 6: Instruction of Debt Collection Agency

If the LBA does not result in payment, we instruct DCBL (a professional debt collection agency) to recover the outstanding debt. They are highly professional and have a high rate of recovery. If a debt collectors is appointed this may negatively affect your business’s credit rating.

Step 7: Legal Claim Filing

As a final step, we will proceed with legal action to recover the debt. The process depends on the amount owed: 

• Less than £10,000: we will file a claim through the small claims court.
• £10,000 – £25,000: we will use the Fast Track process.
• Above £25,000: we will follow the Multi-Track process.
   

This legal action may include filing for a County Court Judgment (CCJ), which can have significant consequences for your credit rating.

By adhering to this procedure, we aim to ensure timely payments while maintaining professional and amicable relationships with all our clients. If you have any questions or concerns about this process, please do not hesitate to contact accounts@cypro.co.uk or your appointed practice partner.