The true cost of late payments
The latest figures released by Bacs Payment Schemes Limited have shown that the true cost of late payments to small businesses in the UK is now around £2.16 billion per year. This huge expense is generated by the resources that are required for businesses to chase up late payments – 39% of firms spend almost an hour a day chasing late payments.
Late payments are almost the norm
Some 600,000 of the UK’s estimated 1.7 million small and medium sized enterprises regularly wait more than the agreed period to pay in the vast majority of small business failures, the reason for the collapse is poor cash flow management. Small businesses fail through lack of cash, not through lack of profit as a general rule.
How can you avoid falling victim to late payments?
This is an issue that is increasingly more high profile and so there is now far more awareness of the problems late payments can cause than there used to be. For small businesses it’s crucial to have a payments policy in place and to ensure that all agreements reference payments. Contracts should set out when the payments are due, as well as detailing consequences for late payment, such as penalties and interest.
Getting help with late payments
12% of small businesses employ someone to deal specifically with invoices that are overdue – a considerable full time expense for organisations that may not have that much cash to spare. Cheaper tools include automated reminders and automatic invoicing systems, which help keep customers and clients on their toes when it comes to making those essential payments on time. One of the most effective ways to ensure invoices are paid is to get some third party help. Solicitors, for example, can provide assistance when it comes to ensuring that debts are paid swiftly, as well as taking steps to make sure that this doesn’t happen again.
Temple Heelis Business Services Department offer bespoke fixed fee and occasionally “no win, no fee” packages to our business clients.
For further details please contact:-
Mr John Sim on 01539 816406, email: jsim@templeheelis.co.uk