membersadvice
The hidden damage of late payment misery
RESEARCH COMMISSIONED BY The Prompt Payment Directory (PPD), a website that encourages people to rate a company they have done business with, paints a pretty grim picture of the impact of late payment on SME businesses. Polling 1,000 owners of small to mid-sized UK
companies that suffer from poor cash-flow due to late payment, revealed 29% struggle with depression, increased stress and other mental health related issues caused by the worry of slow paying customers. The research findings vindicate the Government’s
proposed crackdown on late payments to SMEs, which is spearheaded by the new Duty to Report scheme that requires large companies to report on their payment practices twice a year. However, whilst the new regulations are
welcome, they are limited and only apply to the largest businesses, typically with £36 million annual turnover or 250 employees or more. Relatively few SMEs will deal regularly with businesses of this scale and more often than not, the late payments will be by one SME to another. According to PPD, 34% of business owners
polled regularly lose sleep over late paying clients and 36% of business owners are sacrificing their own salary as a result. Yet despite all the effort by owners, 18% of SME's claim to be on the brink of bankruptcy or liquidation due entirely to late payments. Unfortunately, late payment has knock-on
effects. Staff are often paid late, bonuses are stopped or delayed, staff perks are reduced or removed completely and a reduction in training to improve workforces only adds to the problems of growing a successful business.
Preparation is key to improving debt collection
Although a grim picture, there are a number of steps SMEs can take to reduce their outstanding debts and speed up payments to improve cash- flow; some are simple and some will involve professional support. Whatever the size of your business, ensure you
have an up-to-date credit policy. This simple policy, based around specific target dates, will not only help set out your position for new customers, but will be your first point of reference when an existing customer fails to pay on time.
Dealing with late payment steps to reduce your stress
Make sure you have a proper application form/contract, with terms and conditions that new customers will be required to agree and sign. Then, if something goes wrong with an account, you can prove what trading terms were agreed between you and your customer. Also, when considering new customers ask for
references and follow them up. Do not assume the first order they place has to be on credit terms. Enforce credit limits when you allow them and do not be shy about collecting debts, it is your working capital. If one of your ‘better’ payers is late, call them
and ask if there is a problem. Ascertain they have the goods, delivery note and invoice, and they are satisfied. If not, why not? If yes ask them to pay what they owe – it’s your money. For those that still delay or refuse payment, you
might need the support of debt collection professionals, who can assist you with the more
01926 886 688
www.wrighthassall.co.uk
SimpleTax is the easy way of calculating and submitting your self- assessment return. Developed with individuals in mind and not accountants its completely jargon free and calculates as you go giving peace of mind on your tax liability at all time. SimpleTax is perfect for Painter and Decorators and is HMRC recognised, accessible anywhere via mobile phone, laptop, PC or tablet. Enter your basic personal information and SimpleTax guides you giving hints and tips ensuring you claim all applicable allowances, and with the free phone app you can scan your receipts and invoices and even submit from your phone if you like.
12 decorator
serious stages of debt recovery. They will approach your debtor for you, removing you from the process and acting in your best interests to recover outstanding monies owed to you as quickly as possible. It’s your money. Although you might decide to issue a final
warning letter yourself, stating action will commence if you hear nothing within 7 days, you might prefer the help of experienced legal professionals, who can discuss the other options available to you; a County Court Summons, followed by a winding-up petition if that fails. Ideally, consider all the available options before
commencing legal action. Whilst it can force your debtor into action, it may affect the long-term relationship with your customer more than handing off the debts to be recovered by a specialist service provider, who considers legal action only as a last resort.
And finally…
Remember, it’s your money. Do not be shy about charging interest on the debt, as outlined in your credit policy and if nothing seems to be working visit the customer and tell them you will no alternative other than to commence legal action if they do not pay you there and then, or you reach a satisfactory payment arrangement. If you still get stalled with excuses, like the
cheques in the post or the person responsible for payments is away, do not let go until the debt is paid. Remember, it’s your money and they should be stressed about not paying you, not the other way around.
Try it and see with your 14 day
trial, allowing you to complete your return accurately. Based on the information you enter, SimpleTax will even suggest where further savings could be made, ensuring you claim all applicable allowances.
The PDA have negotiated over 50% off the regular price, making it only £13.00 for Members – visit
http://l.gosimpletax.com/pda-offer/ and enter code PDA2017
association news
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64
