In the UK, and in some sectors particularly, there is unfortunately a late payment culture. If small businesses were paid on time, figures from the Small Business Commissioner (SBC) indicate that this could boost the economy by an estimated £2.5 billion annually.
According to the Small Business Commissioner:
- one third of payments to small businesses are late;
- the average value of each payment is £6,142; and
- 20% of small businesses have run in to cash flow problems due to late payments.
Small Business Commissioner
The Office of the Small Business Commissioner (SBC) was launched in December 2017 to ensure fair payment practices for Britain’s small businesses, and to support them in resolving payment disputes with larger businesses. This information is taken from the website of the Small Business Commissioner.
Check your own processes
Before you contact your customer, make sure you’ve done everything you need to do to ensure that they can make payment.
First, that means checking that your invoice is correct. Your customer won’t necessarily tell you that they’re not paying because there was something wrong with your invoice.
You should check:
- that the invoice includes all the relevant details required for payment
- that it was sent to the right person
- that is was received.
Chase debtors informally first
Once you have checked that your invoice was accurate and received, you can start to chase payment:
- Have you called or emailed to say payment is now overdue?
- Have you talked to the company about steps you can take, like charging interest or stopping supply?
- Have you reminded them that you can and will take further action if required?
Choose the most appropriate next steps
If chasing payment hasn’t worked, it’s time to consider your next step:
- Are you ready to take action or do you need more advice?
- Will you gain anything by negotiating a solution with your customer?
- Have you decided how much time and money you would be willing to spend to get what you’re owed?
Top tip: Visit the Small Business Commissioner website for more information on dealing with late payment.
Ask your accountant
If you need help in chasing late payment, your accountant should be able to help.
The ICAEW’s Business Advice Service (BAS) was established in 2011 to help business owners find an accountancy firm based in your location. BAS-registered accountants offer a free initial consultation, which can be a great way to find the best fit for your business. There is no limit to the number of free consultations your business can request. So, if one accountant is not a good fit, you can keep looking until you find one that’s right for you.
Visit the Business Advice Service to find an accountant today.
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