Late payments can severely threaten your cash flow, and ultimately the survival of your business.
Last year, almost over 50% of businesses were forced to take the no-nonsense approach of suspending work and services for those who owed them money, according to Our Late Payment Survey. The survey showed the negative effects of tardy payments all too clearly, revealing that over 50% of the businesses surveyed had to make at least one employee redundant last year as a direct consequence of late payments.
Stopping your services is certainly one way of making your feelings about late payments known, but it doesn’t do much for already-strained professional relationships.
So, what are your alternatives? Well, you may legally be entitled to charge interest on any money you’re owed.
This gives you the right to claim interest from a customer who fails to pay its bills on time. Instead of relying on the law, you can make your own arrangements in your contracts in relation to charging interest on late payments.
Often, explaining that you plan to charge interest on any overdue payments can be enough to get a speedy payment out of your debtors.
Before it comes to that, make sure that it’s easy for your customers to pay on time. Offer fast and simple payment methods, including Cash in hand, direct debits, standing orders and payment before receipt of goods or provision of services to make it less of a chore for them.
For more advice and guidance, contact us about How do I apply interest on late payments briefing.