A recent study has shown that more than half the small businesses in the UK have to delay payments to suppliers and other parties after being victims of late payment themselves. If you are a small business owner who has been at the receiving end of a customer who keeps deferring his payments, you know how that can disrupt your cash flow. Cracking down on late payments is not easy either, because most small businesses have few clients to start with and have to keep them happy.
Well, there is no foolproof way to ensure you get payments on time, but that does not mean you are completely helpless. One basic rule is to print all terms and conditions on your invoices so there is no misunderstanding between you and the customer. Any delay in payments should be immediately followed up, so ensure you have a point of contact that is always available. The Late Payment of Commercial Debts (Interest) Act of 1998 also allows you to charge an interest on late payments, but be sure to inform the defaulter that you will be charging an interest. Any payment becomes ‘late’ beyond thirty days of the initial payment period, even if nothing was specifically mentioned in the agreement with the client.
However, late payments will happen some time or the other, and as a small business you need the right tools to tide you over a period of financial crisis. If you have a cash flow problem and a bunch of unpaid invoices, you should go for invoice factoring. There are quite a few factoring companies who you can approach, and at our website you can get factoring quotes for free. All you have to do is click right here. It makes the process of deciding on a particular factoring company a lot easier.
Incisive business can help your small business in a various ways. To find out how we could assist you in your business activities, click here and visit our website. We can connect you to service providers specializing in business banking, invoice factoring, vehicle tracking and a host of other services. Check out our website at www.incisivebusiness.com and let us help you grow.
Tags: Business, cash flow, Company, Customer, Factoring (finance), Financial Services, invoice, small business
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June 20, 2010 at 8:10 am |
In my experience many small businesses can do more to collect money from their customers. When money is tight, it is natural for businesses to stretch their suppliers. – I recall a purchase ledger manager at one client saying that the suppliers that push for payment will get paid first and the others are at the back of the queue.
Efficient credit control isn’t necessarily about shouting at the supplier, but is more about having the right processes and monitoring in place.
I agree that factoring or invoice discounting can be a solution, this is particularly so when a business is growing. There are various administrative matters that run alongside and it is important to understand how the cash flow of the business will change. One other point to be careful is that invoice finance companies may quote a headline funding level (eg:80% of outstanding invoices), however there will be exceptions for older debts and perhaps also for customer accounts which are being viewed as being risky.
David Lewis
http://www.camroseconsulting.co.uk