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How Small Businesses can Avoid Late Payments

Many small enterprises in the business to business sector suffer cash flow problems because their customers do not honour their payment commitments at the time agreed.

 
PRLog - Feb. 18, 2013 - Many small enterprises in the business to business sector suffer cash flow problems because their customers do not honour their payment commitments at the time agreed.

Office Assistants (http://www.officeassistants.org/) looks at what the government is doing to help small businesses and what rights you have as a small business owner to demand quicker payments.

Business Minister, Michael Fallon, believes that the majority don’t want new legislation regarding late payment because it could interfere with their business relationships. Instead he is urging all FTSE 350 companies to sign up to the Institute of Credit Management's Prompt Payment Code.  The minister has announced that he will be publishing a list of those who don’t to name and shame them.

The Current Legal Options

You should not forget, though, that you already have legal options through the Late Payment of Commercial Debts (Interest) Act 1998. Under this, there is an understanding that, if no written or verbal agreement about payment terms has been made, the default period for a date that the debt is due will be 30 days from the date an invoice is received or a service is provided. After that period or whenever the debt was due according to a reasonable agreement, statutory interest may be charged on the debt, and the supplier is entitled to additional compensation.

For a variety of reasons, few small businesses choose to enforce this, even if they have to wait up to a scandalous six months for payments for supplies, services and expenses. Often this is because they fear that they will lose the late payer as a client, plus if word got around, it might jeopardise other business as well.

Reminding Customers of your Rights

It is still wise, however, to include a warning that you reserve the right to charge statutory interest on late payments when sending out documents such as quotations, order confirmations, invoices and statements. The statutory rate to quote is the Bank of England base rate at the time the debt falls due, plus 8%. This could be a deterrent for companies that tend to let payment dates slip.

It’s really important to stay on top of your credit control. Office Assistants (http://www.officeassistants.org/) can help by providing regular reports on this. If a customer hasn’t paid up on time, you would probably follow up with a letter or phone call, depending on the type of relationship you have with them.  It’s always a good idea to find out if there are any special circumstances around the missed payment if you can. Then you can choose to negotiate a new date or stepped payments if that seems appropriate, or you can remind them about your right to interest on what is due.

Taking Late Payers to Court

You may decide to stop doing business with persistent late payers and feel you have nothing to lose by making a claim against them. In that case you have the weight of the law on your side. You can claim for unpaid debts plus interest, and you can claim for the statutory interest on late payments during the six previous years.

Contact Office Assistants (http://www.officeassistants.org/) for more advice on how to cope with late payments if you’re a small business owner.

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Contact Email:
***@wordsbysarahmac.co.uk Email Verified
Source:Office Assistants
Phone:0800 1692083
State/Province:Essex - United Kingdom
Industry:Accounting, Finance
Tags:outsourced bookkeepers, essex bookkeepers
Shortcut:prlog.org/12082102
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