Late payments can create cash flow challenges for businesses, but Paidnice makes it simple to set up compliant late fees and admin charges under the UK's Late Commercial Payments: Interest and Debt Recovery rules.
This guide will walk you through setting up admin fees and late payment interest in Paidnice while adhering to UK regulations.
1. Setting Up Admin Fees Based on Debt Recovery Rules
Step 1: Add Fixed Late Fee Ranges
The UK allows fixed late fees based on the invoice value. You can configure Paidnice to apply these charges once per invoice based on the following thresholds:
£40 for debts up to £999.99
£70 for debts between £1,000 and £9,999.99
£100 for debts of £10,000 and above
Instructions:
Go to the Paidnice Dashboard and select Late Fees under the Automation Settings.
Click Add Fee and select Fixed Amount as the type.
Set the Fee Name (e.g., "Admin Fee - £40") and enter £40 in the amount field.
Under More Options & Filters, set:
Minimum amount: £0
Maximum amount: £999.99
Repeat the steps for:
£70 (minimum £1,000, maximum £9,999.99)
£100 (minimum £10,000, no maximum)
Pro Tip: These fees are applied only once per invoice, ensuring compliance and avoiding multiple charges for the same debt.
2. Setting Up Late Payment Interest Charges
The UK's rules allow you to charge 8% per annum above the Bank of England base rate. With Paidnice, you can automate this process so interest is calculated accurately and applied consistently.
Step 1: Add an Interest Charge
Navigate to Late Fees in the Paidnice Dashboard.
Click Add Fee and select Interest Rate Per Annum as the type.
Toggle on Apply the Bank of England base rate to ensure the interest rate stays updated.
Enter the additional percentage as 8%.
Customize other settings, such as:
Frequency: Choose the date (e.g., 1st of each month) to apply charges.
Grace Period: Optionally, add a grace period to allow time for payment.
Step 2: Prevent Double-Charging Interest
Paidnice automatically accounts for previous interest calculations, ensuring there’s no overlap or duplication across invoices.
3. Automating Summary Statements with All Charges
Monthly or weekly statements help clients understand outstanding amounts, late fees, and interest charges. Paidnice’s Auto-Statement Policy allows you to send a summary of these charges in one professional PDF.
Step 1: Set Up Auto Statements
Go to Statements and select Auto-Statement.
Choose the frequency (e.g., monthly or weekly).
Filter statements to include:
Overdue invoices
Late fees and interest charges
Customize the design to match your branding.
Pro Tip: Sending regular statements keeps clients informed, improving clarity and reducing disputes over charges.
Example Scenario
Here’s how these automations would work together:
Client A owes £850 and is 45 days late:
Paidnice applies a £40 admin fee (fixed) and calculates 8% interest above the Bank of England rate.
Client B owes £2,500 and is 60 days late:
Paidnice applies a £70 admin fee and calculates interest automatically.
Monthly, both clients receive an Auto-Statement summarizing these charges and providing a clear breakdown.
Benefits of Paidnice’s Automation for UK Businesses
Compliance Made Easy: Follow UK late payment legislation effortlessly with accurate fees and interest.
Improved Cash Flow: Recoup costs from late payments and incentivize timely payments.
Streamlined Process: Automate calculations and communications, saving time and reducing manual work.
Positive Relationships: Ensure transparency with clear and professional statements.
Ready to unlock the cash you're owed? Log in to your Paidnice account today and set up your admin fees and interest charges in minutes!