Opinions and insight from Roythornes' Debt Recovery team.
Avoiding unpaid invoices as a wedding vendor
- AuthorCatherine Rickett
If you’re a service provider in the wedding industry, this is your time of year to shine. Whether you are a photographer, a make-up artist, or a venue, how do you protect yourself from the last minute cancellation of a wedding? Unfortunately this can sometimes happen, and can sometimes be unavoidable. It could be that the couple has split up, one party suffered from pre-wedding jitters or a catastrophic event has resulted in the cancellation. Here at Roythornes, our Debt Recovery team members are experts in dealing with non-payment to businesses just like yours, and regularly assist with recovering debts on behalf of firms who have either not been paid for events or services rendered, or whose clients have failed to pay the agreed cancellation fee.
When a potential client comes to you to book their wedding, they are reserving a date in your diary that cannot then be sold to another couple. We all know how lengthy the wait times are for weddings, and you will no doubt have a select number of dates available through the most popular summer months. If a couple books a date two years in advance, only to cancel two weeks before, it’s likely that you’re going to struggle to fill that space again at such short notice. If this is the case, it is possible that the late cancellation has led to a direct cost to your business, and you need to protect yourself by having cancellation terms written into your contract.
It should be your first priority to set out in your contract conditions regarding payment terms, particularly in respect of requesting a deposit with any booking. Consider also including tiered cancellation fees according to the dates leading up the wedding as an additional safeguard. A word of warning in the event of non-payment - as you’re pursuing a consumer rather than a business, and because it’s not a commercial debt, you won’t have the protection of the Late Payment of Commercial Debts (Interest) Act 1998, so it’s advisable to specify terms that allow for interest, compensation and payment of legal costs.
Remember, though, you must act fairly when dealing with consumers. A court is unlikely to find that consumers are legally bound by unfair terms. Likewise, a couple is likely to get carried away when planning a wedding and therefore it is advisable to have a 14-day cooling-off period from the date the original contract is signed. It may also be a good idea to establish whether or not the couple has wedding insurance, and if they don’t, suggest that they consider taking out a policy in order to protect themselves (and your business).
So what should your cancellation charges look like in order to be fair?
- Deposits should act as a reservation fee for the services and should therefore be a small percentage of the total price, say, 10%.
- Any non-refundable advance payments and cancellation charges should reflect the business’ actual net costs or loss of profit resulting directly from the cancellation.
- There should be a sliding scale of cancellation charges leading up to the wedding day, providing certainty to clients and reflecting the business’ true estimate of loss should the event be cancelled.
If a client cancels far enough in advance that you are able to find another client to replace that booking, it might be seen as the right thing to do to give the customer a full refund of any monies paid less an amount to cover your administration costs to date. You should look at each situation individually as all circumstances are different. Whilst you don’t want to lose out financially, it’s very important not to be seen to be making money from a service that you are no longer supplying - and remember that word of mouth can ruin a reputation.
It may be that your clients have to cancel for reasons of genuine hardship, so trying to extract any cancellation payment at all may be difficult. If a delay in payment is unavoidable, then it may be prudent to offer the client a payment plan to spread the cost, which will save you from throwing good money after bad.
Whatever the situation you find yourself in, whether you have been left out of pocket by a client who has cancelled at the last minute or failed to pay your invoice after the event has occurred, provided the terms and conditions in your contract are fair and reasonable, our team is on hand to help chase those payments, and provide advice if further legal steps need to be taken.