The cost of doing business is ever rising – skyrocketing inflation, a weak pound and global materials shortages – making protecting cashflow as critical as it has ever been, particularly for SMEs.
But all of these problems only increase the likelihood of customers having their own financial issues that lead to late or unpaid bills. With April’s budget setting season on the horizon, it’s vital firms set themselves up for success and have the debt recovery processes they need in place.
It might seem obvious, but the temptation to jump on an opportunity for revenue, without doing the due diligence, is more acute than ever at the moment. But particularly at an economically volatile time, it’s essential to vet new partners, suppliers and customers to make sure they are financially sound before entering into contracts with them.
Late payment terms and conditions
While there are statutory conditions for late payments, they are lenient, and businesses can weave far more robust conditions intro contracts that more fully protect them. This could include setting out when interest on payments will increase – for example, an increase of 1% for every month a payment is late. Another sensible inclusion is an agreement that the debtor will be liable for legal and agency costs if debt collection services are needed.
It’s important to get ahead of payment issues to reduce the likelihood of it snowballing into a significant cash flow issue. Having automated payment notifications set up is a good starting point, so that letters are sent out the moment payments are due, followed by periodic reminders, meaning less time is wasted chasing money owed. It can also facilitate conversations about cash flow, and whether repayment plans need to be in place to take the pressure off a struggling but valued client.
There is no silver bullet when it comes to ensuring customers pay on time. But these simple steps put a business in the best position to ensure money is flowing in and protect cashflow.
How Moore Barlow can help
We offer a ‘one-stop-shop’ approach which not only includes comprehensive debt recovery services, but also our insights and expertise in related matters such as property, commercial, insolvency and dispute resolution. So whether you are a large lending institution, national accountancy firm or a business owner, we can support you with practical advice and a comprehensive and seamless service. If you need to recover debt quickly and cost-effectively, get in touch with our debt recovery team now.