How To Minimise The Risk Of A Late Payment

Hire an accountant to stay in control of your finances a brown wallet being clamped by a tool
Hire an Accountant – Stay In Control Of Your Finances
July 27, 2015
Store front of a small business restaurant with several pots of flowering plants
How Will The Summer Budget Affect Your Small Business?
August 26, 2015
A man's finger pressing a large calculator

Whether it’s being owed £5 from your best friend or £500 from a regular client, there is nothing more irritating than waiting for your own money. This has been a growing problem for small businesses in the UK in recent years. According to the payment organisation BACS, small businesses are collectively owed an astounding £32.4bn in late payments across the country. When divided up, this number equates to £31,901 per company. Moreover, small businesses are waiting on average 72 days for their invoices to be paid – a day more than a year ago.

This late payment culture can potentially be crippling for the cash flow of a small business. Take a look at these ideas to protect yourself and your business from falling victim to late payment.

Give Them Options

Bank transfers may be your preferred payment process, but it’s not for everyone. Today businesses should take advantage of multiple payment options. Set up a PayPal account, include VISA or Credit Card for payment and put all the details on the invoices or emails. Even consider a small discount incentive for prompt payment.

Prompt Payment Code (PPC)

These terms and conditions, written out and funded by the government, sees firms agree and sign to the code where they ensure that all invoices will be paid within the agreed terms. This code encourages transparency within a business as well as reducing amount of unpaid invoices circulating the country each year.

Add Interest onto Late Payments

The late payment of commercial debt legislation (2008) has seen recent amendments in March 2013 where the legislation requires all private businesses to pay within 60 working days with any additional fees to be charged to late payments if the company chooses to do so.  

Be Proactive

Keep on top of all of your invoices: make it a weekly ritual. Dedicate some time to pay all of your own invoices (you don’t want to be a culprit) and revise all of the pending invoices. If you are waiting for some money coming in, take a note of it, write it in your diary. When the final payment day arrives and you still haven’t received the money, start making phone calls. Be persistent and make sure and speak to the right people, i.e. the company’s accountant or owner. If there is still no payment, then have your solicitor write up a formal letter. Alternatively, you can go to Money Claim Online, where the court can pressure a business to pay debts that are less than £100,000.

If you are looking for an accountant to help keep your company’s finances in check, contact Aston Black today.

Comments are closed.