Latest News Headlines
Commercial Credit News
|News Release: Late Payment risks increase following Brexit|
|Monday, 18 July 2016|
At times of economic uncertainty Boost finds itself not only lending to ‘boost’ investments by SMEs, but also to ‘boost’ cash flow when a few extra days starts getting added to payment terms.
It’s unsurprising that late payment becomes a bigger issue than normal when a recession threatens. All the advice around ‘Cash being King’ comes into sharp focus as consumers become a little more cautious about what they spend and the cash flows into the tills a little slower. Businesses worry that their overdraft will get used up, and that the bank will put the pressure on. So invoices stay on the to do pile rather than moving into to the paid drawer.
Much as we at Boost like lending, we are equally keen to see businesses receive payments from debtors on time, and encourage businesses to adopt a five point ‘on time payment strategy’
o Send out invoices on time
Too many businesses delay in sending out invoices, not because they are embarrassed to do so, but more that they just leave it for the next day. If you are too busy to invoice, get someone else to do it for you.
o State clearly the date by when the payment has to be made
When businesses receive invoices, they will always put them on one side to pay later. By emphasising the payment date, you steer the business into diarising payment for a specific day, rather than just leaving it.
o Ensure you quote all the references that are required
This is the biggest get out any business has for not paying. No purchase order number, no invoice number, no VAT number, no bank details, addressed wrongly etc etc. Don’t skimp on the details and make sure the invoice is exactly as it should be.
o Send a reminder invoice three days after the due date.
Don’t hold back. There is no need to be aggressive. Just send the follow up bill just like the major utilities do when we don’t pay them on time.
o Send a chaser seven days later from ‘Collections’.
Even if you are a sole trader, invent a member of staff, give them a ‘Collections @’ email address and send out the ‘anonymous’ chaser letter. That means you can still maintain the personal relationship with your client without offending them, but they know they have to pay.
Particularly if Brexit does move us to tighter economic conditions, being focussed on debtor collection will be key.
Comment from Alex Littner, Managing Director, Boost Capital
Forums International Ltd
Attendance at your first meeting is free of charge, and please quote reference 'CCR2016' to receive the special 10% discount off of your first annual subscription.
Find out more here.
The latest edition of CCR Magazine, the leading editorial publication in the UK credit industry, is out.
CCR is the premier magazine for consumer and credit professionals. It provides an independent voice to the industry, breaking major news stories and running in-depth features.
As a magazine, it works with and campaigns on behalf of the credit industry to promote its importance as a centre of potential profit and business development to the wider business world.
Providing information and analysis for thousands of senior credit professionals worldwide, every quarter.
GTS Media Ltd
81 Cambridge Road
Registered in England No: 05483197