Interest charges on aged payables

[Bollyver]

What is the name of your state (only U.S. law)? Michigan

I have an aged payable with a supplier that I've been trying to clean up since the crash of 2008. Even though I've made progress they want to start charging interest on it. I'm ok with that, but they just slapped me with 6 months back interest at 1.5% and we never sat down and agreed on terms or signed any contract with them. Can they do that?


Thanks You for any help.

Ernie

 

[LdiJ]

What is the name of your state (only U.S. law)? Michigan

I have an aged payable with a supplier that I've been trying to clean up since the crash of 2008. Even though I've made progress they want to start charging interest on it. I'm ok with that, but they just slapped me with 6 months back interest at 1.5% and we never sat down and agreed on terms or signed any contract with them. Can they do that?


Thanks You for any help.

Ernie

Yes, they can.

 

[Zigner]

What is the name of your state (only U.S. law)? Michigan

I have an aged payable with a supplier that I've been trying to clean up since the crash of 2008. Even though I've made progress they want to start charging interest on it. I'm ok with that, but they just slapped me with 6 months back interest at 1.5% and we never sat down and agreed on terms or signed any contract with them. Can they do that?


Thanks You for any help.

Ernie

1.5% per month or per year?
Also, how much money do you still owe?

 

[Zigner]

Yes, they can.

Well, if it was part of the contract (originally, or as amended), then yes.

 

[Bollyver]

Thank you for the quick answer. We've been doing businesss with company for over 30 years, it seems like when they made the decision to charge interest, it would have been going forward.

 

[LdiJ]

Well, if it was part of the contract (originally, or as amended), then yes.

I don't think it was a "contract" per se. I believe that he is buying goods from the supplier and is receiving invoices that probably call for payment within 30 days. I believe that he has not been paying (or did not pay) within 30 days for quite a while, and therefore has a running, sizable past due balance. Up until now the supplier has not charged interest on the past due balance, but has become fed up with it, and is now charging interest.

 

[Bollyver]

The interest is monthly and there is no contract. We owe them 400k total about 280k is over 45 days. We have been COD with them since 2008 and have brought this down from 800k. We have discussed paying interest if we could not get this cleaned up, but never set an amount or start date. They just decided to start now and back date to May. I have no problem paying the interest going forward we owe them that they basically saved our company by holding our debt. My only issue is the 6 months of back interest will be a huge set back.

 

[LdiJ]

The interest is monthly and there is no contract. We owe them 400k total about 280k is over 45 days. We have been COD with them since 2008 and have brought this down from 800k. We have discussed paying interest if we could not get this cleaned up, but never set an amount or start date. They just decided to start now and back date to May. I have no problem paying the interest going forward we owe them that they basically saved our company by holding our debt. My only issue is the 6 months of back interest will be a huge set back.

You need to realize that the 280k that is over 45 days is an even more huge setback for them, and this has been going on for 7 years. They are having to borrow money to pay their suppliers in order to cover your shortfall. You are actually really lucky that they did not impose interest on the money 7 years ago.

 

[Bollyver]

I do realize that they have went above and beyond what they had to. I have distrubuted over 1.5 mil per year to them over the last 30 years I assumed that they were content with their margin or they would have started the interest 7 years ago. I'm going to start paying the interest, but if I pay the 6 month back dated amount what's stop them from going back even farther?

 

[LdiJ]

I do realize that they have went above and beyond what they had to. I have distrubuted over 1.5 mil per year to them over the last 30 years I assumed that they were content with their margin or they would have started the interest 7 years ago. I'm going to start paying the interest, but if I pay the 6 month back dated amount what's stop them from going back even farther?

If they were going to try to do something like that, they would have already done it.