3. Written, Verbal or No Terms?

Where there are no written 'terms of credit sale' between supplier and purchaser, the Act provides for a mandatory 30 day credit period and late payment interest payable from the due date as if there were written terms. Again, where there were no written terms, and the payment was to be sent to you on, say, delivery, a 30-day period will commence and you can claim interest after this period: however, in legal terms, there was no credit period in this transaction.

This means that you cannot decide to take a 30-day credit period from anyone you choose as the creditor can take legal action against the debtor from the first day the invoice was overdue. You can charge interest for this void period within your own contract terms.

There is no need for the terms in the Act to be added to your terms and conditions of credit sale, or in anyway indicated on your purchase order or invoice, for the Act to cover your trade dealings. But not to include a specific payment penalty clause is just one step behind not having a written terms and conditions of credit sale contract. The Better Payment Practice Group suggests the following words to inform, and warn, your customers that you want paid as agreed:

"We understand and will exercise our statutory right to claim interest and compensation for debt recovery costs under the late payment legislation if we are not paid according to agreed terms."

Where payment is due at the end of the month following the month the invoice was raised, the first day of the month following this period will count as the first day (meaning that the legislation will still allow for agreed credit periods in excess of 30-days without a special clause in your terms, but you should state your terms in all circumstances).