Integration of Statutory Interest and Late Payment Fees Calculator under the Late Payment of Commercial Debts (Interest) Act 1998
Description:
To enhance the invoicing module within FreeAgent accounting software, we propose the integration of a calculator for statutory interest and late payment fees as per the Late Payment of Commercial Debts (Interest) Act 1998. This feature aims to simplify the process for freelancers, small, and medium enterprises (SMEs) in calculating and adding statutory interest to overdue invoices directly within the software.
Justification:
The primary user base of FreeAgent consists of freelancers and SMEs who, when faced with overdue invoices, often resort to the statutory interest rates and fees as outlined by the Late Payment of Commercial Debts (Interest) Act 1998. Currently, users have to manually calculate these fees using external tools, such as the calculator provided by the Small Business Commissioner (smallbusinesscommissioner.gov.uk). This process is not only cumbersome but also time-consuming, potentially leading to errors and inconsistencies.
Feature Overview:
- Automated Calculation: The calculator will automatically compute the statutory interest and late payment fees for overdue invoices based on the principal amount, overdue days, and the statutory interest rate defined by the act.
- Manual & Automatic Triggering: Users should have the option to trigger the calculation and addition of these fees either manually or automatically. This flexibility allows users to maintain control over their client relationships and the specifics of each late payment situation.
- Integration with Payment Reminders: The calculated fees should be available as merge fields, making it easy to include them in payment reminder emails, enhancing the efficiency of communication with clients regarding overdue payments.
- Customization for Future Expansion: While initially focusing on the default fee structure supported by the smallbusinesscommissioner.gov.uk, the design should allow for future customization to cater to bespoke situations, offering flexibility as the user base evolves.
Benefits:
- Enhanced Efficiency: Saves time and reduces the hassle involved in manually calculating late payment fees, streamlining the invoicing process.
- Increased Accuracy: Minimizes the risk of errors in manual calculations, ensuring accurate and consistent application of late payment fees.
- Improved Cash Flow: By facilitating the easier addition of statutory interest and fees, businesses may improve their cash flow through quicker resolution of overdue payments.
- Strengthened Client Relationships: The option to manually decide when to apply late payment fees allows businesses to manage client relationships delicately and effectively.
Conclusion:
The integration of a statutory interest and late payment fees calculator directly into FreeAgent’s invoicing module will significantly benefit freelancers and SMEs, aligning with their needs and enhancing the overall functionality of the software. This feature not only aligns with FreeAgent’s mission to simplify the accounting process but also adds a valuable tool for managing finances and client relationships more effectively.
Thanks very much for this detailed proposal, it’s very interesting (and nicely laid out!) and it makes a very good case for the integration of a late payment calculator raising some great points.