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Late payments and your business

ended 25. January 2022

Late payments are the scourge of the small business world. With costs rising across the board, cashflow will be king more than ever this year, and one of the things that scuppers cashflow the most is companies - often deliberately - dragging their heels when it comes to payment. With this in mind, a few Qs below. We will be issuing this alert to the local and national media tomorrow (Wednesday) morning. Be as outspoken as you like. 

  • Have late payments ever put your business under pressure? If so, give us a bit of detail and you could be a case study in a newspaper or on the telly.
  • Should the Government make it illegal for companies to ignore payment terms unless there is a valid reason to do so? If not, what should the Government do?
  • How should firms that pay late be punished? Fines, naming and shaming, putting the FD in the stocks, tarring and feathering, molten lead? You can use your imagination here. Go for it.

As ever, no need for War and Peace. Journalists like soundbites, not essays. If you're a Premium user, your response will be edited by an experienced hack. Peace.

12 responses from the Newspage community

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Andrew Deighton
Owner at AWD Development Solutions Ltd.
"I've found that the bigger the client is, the longer they take to pay. And if they have to raise a Purchase Order first then that adds more pain and delay. My best payers are the charities, sole traders and small businesses I work with, and the worst are the larger corporates. Recently, with new clients I've started to invoice 50% upfront. I then invoice the balance after delivery. I think there's a bit of understanding and empathy from smaller businesses as they have the same issues with their clients. I always pay my invoices ahead of the agreed date as that's how I'd like to be treated."
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Premium
Dr Marianne Trent
Clinical Psychologist at Good Thinking Psychology
Making it illegal to ignore a company's payment terms is an interesting idea! It would certainly take away the feeling of being mean or penny pinching when chasing unpaid invoices and implementing late payment charges. Work should be paid for and it's unjust to put additional steps between business owners and getting paid especially when cashflow may already be impacted upon due to pandemic factors.
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Premium
Debbie Porter
Managing Director at Destination Digital Marketing
We carry over debt at the end of every month to the tune of thousands of pounds, with some people ignoring our 30-day payment terms and going with 45, 60, 90 days… or whenever they have been chased 5 or 6 times. There have already been measures put in place by government to mandate large businesses pay small businesses promptly. However, raising the late payment interest charges usually means putting another invoice on your books that invokes payment of the original invoice but not the late payment charge, leaving you to decide whether or not to chase a much smaller invoice or write it off to maintain a client relationship.
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Helen Llewellyn
Director at Infinity Wellbeing
Non payment is never a problem for me. I bill up front, I only do the work after I have been paid. Turn the tables and take charge.
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Legend
Maddy Alexander-Grout
CEO at My VIP Rewards
This is a really hard one, as a small business if someone pays you late then it can have a knock on effect meaning you have to pay others late. It’s usually the big corporates who don’t stick to payment terms. I think small businesses are mindful of each other’s cash flow. Communication is key if you can’t pay someone on time. People are always happy to negotiate. If every business had the same payment terms it would make peoples lives easier from a budgeting and forecasting point of view. I think another thing for the government to think about may confuse them! Too busy having parties!
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Jez Lamb
Founder at Beers@No.42
Late payments can be so crippling and there's definitely a fine balance to be had. As a small business, often dealing with far larger businesses, it's how far you can push them when challenging late payments. You know it's going to be paid but pushing them too hard can be the difference between them ordering again or going elsewhere - a financial tightrope we have to walk
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
This has been an ongoing problem for businesses for as long as I can remember. Luckily for me, the way remuneration works in mortgage world, it isn't a problem I see personally very often. However, it is an issue for many clients who own SME's with other businesses, particularly large organisations, seemingly setting their own payment terms. To make matters worse often the procurement side of the business seemingly doesn't talk to their Accounts Payable team; so despite the buyer agreeing to 30 days after invoice you chase only to told "we always pay 60 days end of month"...
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Marcus Wright
Managing Director at Bolton Business Finance
Late payments and also extended payment terms are a real thorn in the side of many of our clients. Waiting 45-60 days to get paid is not uncommon, even if the agreed terms are 30 days. We are seeing an increased number of small businesses enquiring about invoice finance to mitigate the issue in recent months.
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Claire Taylor
Founder at Raspberry Flamingo Copywriting And Content Marketing
As a small business owner, late payments can cause severe problems. I have strict payment terms and I stick to them. If the client goes over them, the invoice is sent to a collection agency who apply the Government guidance for late payments - I get 100% of the invoice value and the client pays the collection agency's fee. Win Win. Even when I have had to apply this procedure I've maintained my relationship with my client and have worked for them again on a strictly proforma basis.
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Fanny Snaith
Owner at Fanny Snaith - Certified Money Coach
Commercial late payments may be subject to 8% interest above the B of E base rate. Invoices come with terms and conditions. Try this on your invoice - Terms and conditions accompany this invoice. All late payments will be subject to 8% interest. If that does not work use Moneyclaim online to let your invoicee know that you mean business. Just sending a screenshot of your intention to go to court will very likely jog the payment along.
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Martin Roberts
Managing Director at Neuways
Fortunately, we’ve not had to deal with late payments. As mentioned, “cash is king” is a mantra that we realised very early on when starting Neuways. We have to pay our suppliers and staff’s wages, so we place an emphasis on avoiding late payments as much as possible. We are upfront and transparent with our customers before we work together about our credit terms, as opposed to after the invoice has been issued, so that nothing can be lost in translation, and as a result we do not experience late payments.” The creation of a law to make late payments illegal wouldn’t achieve very much. By resorting to the law, you would be damaging your relationship with said customer, potentially beyond repair. By being upfront and honest as soon as possible, the right tone can be set when it comes to ensuring payments are regularly made on time.
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Jessica Ross
Founder & CEO at Smashtag Social
Just pay your god damn bills! It blows my mind that companies act this way. If I had this attitude towards my work, and just said to my clients that work I contractually promised to deliver was going to be 2 weeks late I would NEVER have any repeat business. Whenever an invoice is sent through to me I pay it straight away. For a small business, this can be the difference between being able to pay their bills or not. Simply saying that your accounts team were busy or someone was away on holiday for 2 weeks simply isn't good enough. Businesses must do better!