Late payment of bills growing

[Brian]

It's a pretty difficult predicament for smaller businesses to be in. Do they use the late payment legislation to charge interest etc and risk losing the business or just grin and bear it and slowly run out of cash!

Recent statistics are showing that people aren't using this legislation as they fear losing customers. Sid makes some very good points about making your terms of payment very clear etc.

Brian IFA

[TFGtv.com]

Originally Posted by Brian

It's a pretty difficult predicament for smaller businesses to be in. Do they use the late payment legislation to charge interest etc and risk losing the business or just grin and bear it and slowly run out of cash!

Recent statistics are showing that people aren't using this legislation as they fear losing customers. Sid makes some very good points about making your terms of payment very clear etc.

Brian IFA

I take the 'grumpy old git' angle on this one.... And remind all and sundry of the lyrics of that well known folk song, "The Wild Rover"......

"I asked her for credit and she answered me nay!

Saying custom like yours I can get any day"

[barryhynd]

LOL! very apt Matt and well put.

Part of my remit with businesses I work with at present is their credit control. When I get to asking people why money hasn't been collected or telephoning people asking for money I always remind them that we're not a bank or a charity to that matter!

On another note though many businesses wouldn't get business if they didn't offer credit to customers, sometimes you have to take some risks but as long as they are managed properly it can work in your favour.

I'm under no illusions that things will probably get worse which is why I would ask everyone to focus on their cash and get it in the bank, it's the only way to ensure survival.

Cash IS KING

[stugster]

Originally Posted by barryhynd

I would ask everyone to focus on their cash and get it in the bank, it's the only way to ensure survival.

Cash IS KING

Great point!

This money you have in customers' pockets, or sitting in the office which isn't in the bank is NOT earning you interest!

Some banks (for example Abbey) offer a Reserve Account with very nice interest rates. If your cash is NOT tied up on other projects, why is it not in an account making your business - and essentially YOU - more money?

[Power Lunch Club]

Some clients are really taking the mickey just now....with regards to late payments....I do appreciate they are waiting to be paid too....

So everyone is becoming the same....

Gordon

[promostamper]

i lived in belgium for 14 years and heard of many people who had not paid bills having their accounts frozen until the debt was paid.

If doing something for one of the neighbours that is not sold on my online store i always send them a quote the next day and request 50% payment upfront and they will receive a 5% discount on final receipt of invoice if paid within 2 working days and have found this works quite well

[TFGtv.com]

Originally Posted by Power Lunch Club

Some clients are really taking the mickey just now....with regards to late payments....I do appreciate they are waiting to be paid too....

So everyone is becoming the same....

Gordon

Hmmm; must admit. I've three on the boil at the moment and that's VERY unusual for me. One guy is fair enough; he's been screwed over himself by a local council and is paying me bit by bit. But the other two are just at it and will shortly wind up in court by the looks of it....

Sigh; it's just like the good ol' days of 1988....

[Adventurelife]

I am lucky that around 85% of my business is paid upfront or at time of delivery. However , of those that do have credit terms I have seen a sharp increase in them extending the time to payment. To my huge disappointment this has include local councils/education departments ie government money.

We are currently all over it like a rash at present with the task of getting commitment dates of payment on each and every call.. We have managed to reduce the outstanding of over 30 days by 75% over the last 3 weeks. Next year I have a KPI of 90% paid up front. I used to run a business in Dublin and also one in Belfast and if you think late payment is an issue you should try Dublin! It was not unusual to have someone walk into the office with a bag full of cash ranging from £25k to stupid amounts in settlements that had been outstanding a year.

Just today I did a pre quote prior to a full quote due to the payment terms I was after for a job in 2009. I asked for 50% upfront and the rest 10 days before delivery. I did explain the reasons and how much I would lose if there was a cancellation or the numbers involved reduced. I fully expected to be told to jump from a high height but to my amazement they have accepted the terms as long as we agree on the services to be delivered. This is our potential biggest deal ever over a 3 day period we can earn 2 months income but I was not prepared to do it unless the payment terms were in our favour as I judge the risk as to high.

On a payment side I have changed my own payments to suppliers to 7 days. I think in these times you can build a lot of friends by paying quickly. You never know when you may need a bit of help.

[promostamper]

i have always paid my suppliers within 5 working days - unless i am abroad then it is about a week later than the 5 working days - makes me nervous if it builds up what i have to pay

[barryhynd]

I think Adventurelife is in a very unique position of being paid for most bookings upfront. I dont think i'd be recommending that to businesses who operate with credit terms. I think it's important that you balance paying people with getting paid. Businesses do go bust that are highly profitable purely because they run out of cash.

It's a vicous circle because if people dont pay you in time you cant pay your suppliers. This is happening just now and it's a very difficult cycle to break. Smaller businesses need to be a bit more assertive in collecting cash and stop being a bank to the big boys.