Did you know that in 2015, 60% of Invoices were paid late, contributing to 20,000 company closures in the same year and over 70,000 in the past 3 years, that is a phenomenal figure. That means at least 70,000 people lost their business and a shed load of money, not forgetting those that were employed by these companies and that is in just three years. Looking at these numbers we could say each business had three members of staff 70,000 x 3 = 210,000 people minimum not supporting the economy because of poor cash flow and not taking late payment seriously enough and sadly losing out on seeing their business grow.
We went into business to be free of politics, enjoy our work and most importantly make money
Late Payment is a serious matter, but if you think the Government are going to help then you are going to be sadly mistaken because there is nothing that they can really do. Do you seriously think that they will lay down harsh penalties to those companies that pay late, of course not. They have already put in place the Late Payment Directive, but it must be at company level that this can be actioned and many businesses won’t do it for the simple reason they do not want to lose a customer if at all possible.
Article 50 has been actioned by the UK leaving the European Union, none of us, including our politicians have a real sense of what will occur and what impact this will have on business for at least ten years and that is only after we have managed to get strong negations off the ground and agreed. Let’s also not forget that the EU laws that are in place at present which protect our rights here in the UK will need to be drafted under UK Law, and we do not know as yet how that will pan out.
What I am getting at is there will be uncertainty for a long time to come, and that is why it is so important that your priority in the business is
- Cash Flow that will help combat Late Payment
- Strict Procedures to combat serious Debt issues
- Processes that will highlight Payment issues before they get out of hand
They say Time is Money so think on this, every time you have to get involved chasing late payment out of the normal chasing process you are losing money, through time spent trying to get your money.
If you give out credit, look at the history of customers, how well they paid, what issues did you come across, such as disputes and list them and then find a solution to reduce the outcomes you don’t want.
Remember, debt recovery agencies will offer roughly the same solutions but they do differ considerably in how they work with you and your customer. You must always be in control and if you are not sure of the company’s work ethic and customer relations, then dump them.