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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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I run a ltd company which has one major client. We used to

Resolved Question:

I run a ltd company which has one major client. We used to have a 30day payment term but this changed in 2009 to "we pay you when we get paid from their client" - firstly is this a fair payment term by definition and if they breached this term would it revert to industry standard 30 days? Also on latest invoices payment terms were listed as strictly 30 days and invoices accepted by the company - does this therefore change the terms back to 30 days?
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you. I am corporate and commercial law expert.
This is not per say an unfair term. However I would personally never agree to this term unless it was for some goodwill reason or to develop a relationship. The reason is because you do the work and you do not then have an opportunity to manage the relationship with whoever pays your client - essentially it is a nightmare for cash flow.
If you agreed this term in writing then unfortunately it will apply to any existing arrangements. That means that if they have been paid - then should pay you immediately not then on a further 30 days credit. Unfortunately you wont be able to change these payment terms for any work in progress.
What you would need to do for future business is, in writing withdraw this term of business and say them that any future business is subject to your normal payment terms.
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.
What if they had admitted over the phone to withholding some of the money they have received and not making payment? Can I ask for a reconciliation from their client to ascertain if they have adhered to the payment term? Surely if they haven't the term would then fall back to the industry standard term?
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
You can ask their client to confirm if payment was made, so long as you have not agreed an obligation to not to approach their client. Bare in mind this is likely not to go down with your client!
Your client should pay the money to you without deduction, set off or with holding immediately once they have received payment themselves, if they do not then they are in default and you can seek redress against them in the county court.
To be certain and to give them no opportunity to rely on these payment terms again, I would recommend that you serve them with notice to say all future dealings must be done on thirty day payment terms. It is better to have this in writing to rely on in court than to rely on some implied intention resulting from the client's default.
Kind regards
AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3609
Experience: Solicitors 2 years plus PQE
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