What to do when a supplier puts its prices up
Prices go up, and most suppliers do it properly: a notice with the new prices and the date they start. The money leaks around that date: last month's delivery billed at the new price, a rise applied to items the notice didn't cover, or new prices on invoices before anyone told you.
In short
- Check the notice gives the new rates, the items they cover and the date they apply from, and whether that goes by order, delivery or invoice date.
- Read what your agreement or accepted quote says about price changes before you pay a new price.
- Check the invoices either side of the date, and end the old rates the day before the new ones start rather than overwriting them.
Read the notice properly
Before you file it, check the notice answers these, and ask the supplier for whatever it doesn't:
- which items it covers: everything, a category, or a list
- the new rates themselves, not only a percentage. A percentage applied across a price list rounds item by item, so ask for the new list
- the date the new prices apply from, and whether that goes by order date, delivery date or invoice date
- whether prices you've already agreed still hold: a quote for a job until it expires, or a schedule until its end date
- whether any charges change too, such as delivery, fuel levies or minimum-order fees
Check what your agreement says
If you have a schedule of rates or a supply agreement, read what it says about price changes: whether prices are fixed until a date, how much notice the supplier has to give, and how a change is worked out. business.gov.au's first tip for a disagreement with a supplier is the same: check your facts, and if you have a written contract, read it carefully.(business.gov.au: Suppliers)
A quote you accepted is a contract for that job: business.gov.au notes that an accepted quote becomes legally binding, and a written quote should carry its expiry date. If a new rate turns up on invoices for a job you have an accepted quote for, check the quote's terms and expiry date, and ask the supplier which price applies before you pay.(business.gov.au: Prepare quotes)
Many supply terms are the supplier's standard terms, offered as they are. The ACCC's guidance on unfair contract terms in standard form contracts, which protect small businesses as well as consumers, gives, as an example of a term likely to be unfair, one letting a business change its prices while the customer has no way out of the contract, and explains that a right to leave without penalty can balance it. If a court finds a term unfair, it's void. Whether one is depends on the whole contract, so ask a lawyer about your own terms.(ACCC: Contracts)
Check the invoices on both sides of the date
Invoices around the change are where the mistakes sit. With the new price list and its start date in front of you, check:
- invoices dated before the change bill the old rates
- if the change goes by delivery date, an invoice dated after it for a delivery made before it still bills the old rates, so check the docket dates
- invoices dated after the change bill the new rates on the items the notice covered, and only those
- the unit hasn't changed along with the price, such as a new pack size, or a price per length where it was per metre
- the rise hasn't been applied twice, as a new list price with a percentage on top
- charges the notice didn't mention haven't gone up with it
Update your schedule, and keep the old rates
Record the new rates with the date they start, and end the old ones the day before rather than overwriting them. An invoice is checked against the rates in force on its date, and a late invoice for an earlier delivery needs the old rate to be checked against.
If the supplier sent only a percentage or a letter, set the new rates out yourself and ask them to confirm, as you would a new schedule. Keep the notice with the schedule it changes: the guidance on business.gov.au suggests keeping records of your communication with suppliers, which help if a disagreement goes further.(business.gov.au: Suppliers)
When prices go up without notice
If a higher price turns up on an invoice with no notice, ask before you pay. If your agreement fixed the price, send the supplier the agreed rate and the line on their invoice, and ask them to bill at the agreed rate or credit the difference.
If nothing fixed it, the rise is a question rather than an overcharge: ask for the new price list and the date it applies from, and agree it for the invoices that follow. With no agreed rates at all, what you've recently paid the same supplier is the best comparison you have, and the guide to judging whether a price is fair covers how to use it.
How CostCode handles a price change
CostCode checks each invoice line against the schedule in force on the invoice's date, not the day it arrived or the day you look at it. When a supplier changes a rate, change it in CostCode from the date it applies: the schedule's next version starts that day with every other rate as it was, invoices dated before it stay checked against the old rate, and the schedule lists every version with what changed and who changed it.
Loading a whole new price list works the same way: a new schedule for a supplier ends the one it replaces the day before it starts, so invoices dated in the old one's window are still checked against the old rates. An invoice dated outside every schedule's dates, or with no date on it, has no agreed rate to check against, so CostCode never holds it against a rate that had ended; with nothing else to check them against, its lines show as unverified with the reason.
Invoices CostCode has already checked keep their result until they're re-checked, and the schedule's panel offers a re-check of that supplier's held and unverified invoices. A re-check never puts back on hold an invoice someone has cleared.
With no schedule on file, CostCode compares a price with what you've paid the same supplier for the same item, once there are three earlier prices to go on by default. A rise against that history stays with your team and is never quoted to the supplier, because what you've paid before is your evidence, not the supplier's promise.
Questions
How much notice does a supplier have to give of a price rise?
There's no single answer: it's whatever your agreement with the supplier says. If yours says nothing, agree a notice period the next time you settle prices with them.
Does a price rise apply to deliveries made before its start date?
That depends on how the notice words it: by order, delivery or invoice date. If it isn't clear, ask the supplier, and check the docket dates on any invoice dated just after the change.
Can a supplier change the price on a quote I've already accepted?
An accepted quote is a contract for that job, so check its terms and expiry date first. If an invoice for that job bills a new rate, ask the supplier which price applies before you pay it.(business.gov.au: Prepare quotes)
Should I delete the old rates when the new ones arrive?
No. End them the day before the new ones start. A late invoice for an earlier delivery should still be checked against the rate that applied on its date.