Despite repeated calls for reform, the Government has shown little support for tackling chronic late payments, leaving businesses to fend for themselves.
One effective solution is to tighten your credit control policies to manage the issue.
Strengthening credit control
A solid credit control system helps you keep payments on track.
Here are some ideas on how you can improve yours:
- Run credit checks before offering payment terms.
- Issue invoices as early as possible, ensuring they are clear and detailed – you do not want to leave any chance for confusion or dispute.
- Automate reminders to chase up payments before they become overdue.
If a customer repeatedly pays late and ignores your attempts to contact them about these payments, it could be worth pursuing legal action or alternative methods to solve the issue.
You may also have to consider removing them as a client.
Reviewing your payment terms
Many overlook the importance of having clear payment terms. Make sure yours:
- Set out payment deadlines and penalties for late payments.
- Define accepted payment methods and any upfront deposit requirements.
- Are reviewed regularly to keep up with changes in business and law.
Being upfront about these terms from the start helps avoid disputes and makes expectations clear.
The risk of doing nothing
If you fail to address the chronic late payment issue, it will damage your business’s reputation.
Suppliers and partners might start doubting your reliability, and if you are waiting on payments, you might struggle to pay your own bills on time.
This kind of domino effect can create serious financial problems, potentially leading to you needing to close your business.
With little Government support, you need to be proactive.
If you are facing cash flow issues due to persistent late payments and would like guidance on improving your credit control, please speak to our team.
