Press release

Coping with late payment, a top concern for small businesses

15-Nov-07
In the current credit squeeze, cash flow is likely to come under particular pressure.

According to research from the Federation of Small Business, the time spent chasing late payment, and the effects of dealing with Bad Debt, is costing UK small and medium sized businesses an estimated 286 million man hours (and around £3.6bn) each year. A recent study by the Institute of Directors highlighted late payment as the greatest concern for small businesses, ahead of lack of finance and business rates.

There is much you can do to protect your business against catastrophic Bad Debt. If you clearly state your payment terms in your terms and conditions when you first begin a business relationship, there is little room for misunderstanding. You could also consider requesting some monies on account and bill your client on a monthly or regular basis, rather than issuing one final bill.

There is legislation to protect small businesses against late payment by larger businesses. This is in the form of the Late Payment of Commercial Debts (Interest) Act 1998. It enables them to charge late-payers interest on their debts, and even “Collection costs”, in addition to legal costs.

If a bill goes unpaid for too long, sometimes there is no alternative to seeking payment through the Courts, by debt or insolvency proceedings, or if your customers business fails, you may need to deal with a third party who is appointed to deal with it’s creditors.

It is often best to speak to a solicitor, for a professional opinion on your best course of action and its likely outcome. Contact Tony Hatton, of High Wycombe Solicitors, Reynolds Parry Jones (Tel: 01494 525941 Email: tony.hatton@rpj.uk.com).