Results 1 to 9 of 9

Thread: Interest charged for services and what i can do about not getting paid.

  1. #1
    Email problem
    Join Date
    Jul 2012
    Location
    Cape Town
    Posts
    3
    Thanks
    3
    Thanked 0 Times in 0 Posts

    Interest charged for services and what i can do about not getting paid.

    HI There. I am new to this site and want to thank everyone for their help in advance.

    I have a problem with a client not paying me. I have worked for this client, on a type of permanent basis, from Nov 2011 to about April or May 2012. This is when the company let me, and other employees, go due to not being able to afford the salaries. At that point they still owed me 3 months salary. I have, since then, started a web development company. The company I was working for, then come back to use my services as part of my company, as they cannot find anyone else as good as me, with a promise of a weekly payment as they are still not able to pay me on a permanent basis. They have made small payments towards the salary they owe me, but are still R3000 overdue. They also now owe me payment for the work I have done through my company for them.

    On my first weekly invoice to them, I stated that i was going to charge a 5% interest on all outstanding/overdue amounts commencing from my next invoice. With the next invoice I sent, I charged a 5% interest on the total overdue amount and they are now telling me that i am not allowed to do so in terms of the national credit act. As i do not know much about this type of thing, I wanted to know if I am allowed to charge interest. Will it be statutory interest or contractual interest. There is also no written contract, but a verbal agreement. The other thing is that my company is not registered as a business or for VAT as yet. Planning to do that soon. Can I charge interest on every weekly invoice or is interest charged monthly?

    The other thing is that I own the rights to their domain names and websites as they are registered on my name. I was thinking of putting their sites offline till payments are received, but if I do this they will not get paid and will risk losing their business as it depends on the sites being online. That will then mean that i will not get any of my money out of them. What should I do?

    Thanks in advance for your help!!!!!
    Shaun Van der Poll

  2. #2
    New Member
    Join Date
    Jun 2012
    Location
    Durban
    Posts
    3
    Thanks
    0
    Thanked 1 Time in 1 Post
    Quote Originally Posted by shaunvdp View Post
    What should I do?

    Thanks in advance for your help!!!!!
    Shaun Van der Poll
    Hi Shaun. Congratulations on starting your own business. An important thing to get right from the beginning is to try and stop the "snowball effect", where someone owes you a small amount, and continues to use your services, and then owes you a bit more...and eventually the entire account is out of hand. This sounds like the road you are about to go down. They may only be able to pay you when their own business picks up a bit, and adding interest will sour the relationship. I expect you want to do work for them again down the line, so one option would be to send them a letter, stating exactly what they owe you, that you are honoured that they have chosen you as a service provider, but that you wont be able to do any further work for them until their current account is up to date. Holding their domain names to ransom is somewhat frowned upon generally, but if the hosting of those domain names is incurring any cost to you, then it's understandable to tell them their sites will go offline at some point if payment is not being made. If they are paying someone else for the domain hosting, perhaps consider adding web hosting to your own business portfolio, and get them to pay you for the hosting instead.

  3. Thanks given for this post:

    shaunvdp (13-Jul-12)

  4. #3
    Diamond Member Blurock's Avatar
    Join Date
    May 2010
    Location
    Durban
    Posts
    3,439
    Thanks
    660
    Thanked 765 Times in 630 Posts
    Blog Entries
    1
    Good advice. There is a fine line between being firm and being nasty as perceived by the customer. Once the client/customer feels threatened and painted into a corner, communication breaks down and the outcome is usually a no-win situation.
    Excellence is not a skill; its an attitude...

  5. Thanks given for this post:

    shaunvdp (13-Jul-12)

  6. #4
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    Quote Originally Posted by shaunvdp View Post
    On my first weekly invoice to them, I stated that i was going to charge a 5% interest on all outstanding/overdue amounts commencing from my next invoice. With the next invoice I sent, I charged a 5% interest on the total overdue amount and they are now telling me that i am not allowed to do so in terms of the national credit act.
    The short answer is they're right

    I'd suggest you stick to this being a COD account, unless they fill in a credit application
    And of course you'll decline giving them credit even then because of their poor payment history (your personal experience).

    My suggestion is given the history, don't provide further services while the account remains overdue.
    The trouble with opportunity is it normally comes dressed up as work.

  7. #5
    Email problem
    Join Date
    Jul 2012
    Location
    Cape Town
    Posts
    3
    Thanks
    3
    Thanked 0 Times in 0 Posts
    Hi Thanks for your advice... I actually do offer web hosting as well... the company in question is actually using my hosting service. They have not paid for that as yet either... which is why I am thinking about putting their sites offline. Its not really a question about holding their sites for ransom i think. I have built the sites, I am hosting the sites and i have registered the sites for them using my own money. This, I think, makes it my property until payment is received. Am I wrong in thinking that? They do owe me the money, and having worked with this company and the people in the company I know that if I hand their sites over to them I will not hear from them ever again. Where will i stand after that?

  8. #6
    Email problem
    Join Date
    Jul 2012
    Location
    Cape Town
    Posts
    3
    Thanks
    3
    Thanked 0 Times in 0 Posts
    The interest is really the least of my concerns actually. the total interest on any account amounts to nothing really. Maybe a hundred bucks a months at most. so that is not going to make a huge difference to what is owed to me. all I am worried about is getting what is owed. I can do without charging interest, not to mention the calculation of said interest on a monthly basis ...

  9. #7
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    When it comes to hosting, give notice that hosting services will be suspended if payment is not received by x date. On the website design and domain registration fees, only giving access to the backend once payment is received seems fair enough.

    You really need to have a contract in place. Go Google what others are doing for terms and conditions...
    The trouble with opportunity is it normally comes dressed up as work.

  10. Thanks given for this post:

    shaunvdp (13-Jul-12)

  11. #8
    Platinum Member SilverNodashi's Avatar
    Join Date
    May 2007
    Location
    Johannesburg, South Africa
    Posts
    1,172
    Thanks
    11
    Thanked 188 Times in 136 Posts
    two things, from someone in the industry for a while:

    1. You can charge interest on late payment, but had to made them aware of the interest on late payments upfront, and they had to agree to the terms. Without a TOS (Terms of Service) agreement you can't charge interest.

    2. Same with the hosting, if you let them know upfront that their hosting will be suspended, then do so. Don't be soft with them. Stand on your terms of Service.
    Get superfast South African Hosting at WebHostingZone

  12. Thanks given for this post:

    Dave A (14-Jul-12)

  13. #9
    Diamond Member Blurock's Avatar
    Join Date
    May 2010
    Location
    Durban
    Posts
    3,439
    Thanks
    660
    Thanked 765 Times in 630 Posts
    Blog Entries
    1
    Quote Originally Posted by Dave A View Post
    You really need to have a contract in place. Go Google what others are doing for terms and conditions...
    Many mistakes are made in business because terms and conditions are not encapsulated in a written agreement. Don't be caught out. The days of doing business on a handshake are long gone.
    Excellence is not a skill; its an attitude...

Similar Threads

  1. VAT - How and when should it be charged?
    By rfnel in forum General Business Forum
    Replies: 9
    Last Post: 14-May-17, 06:00 AM
  2. [Question] VAT201 Return amended - Interest and penalties Charged?
    By nichoalscfm in forum Accounting Forum
    Replies: 2
    Last Post: 04-Jan-12, 11:28 AM
  3. Tax not being paid to Sars
    By Transport Exchange in forum Tax Forum
    Replies: 5
    Last Post: 01-Jul-11, 01:21 PM
  4. Possible SEO services scam from Omega Services - be careful
    By SilverNodashi in forum Scam Alert Forum
    Replies: 3
    Last Post: 29-Jan-11, 11:43 AM
  5. Replies: 0
    Last Post: 20-Apr-10, 06:58 PM

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •