Sometimes, businesses fail. If a failed company is a customer of yours it can be an expensive and potentially disastrous situation.
In most cases their will be little you can do, except wait and see if any money is left for creditors when the affairs of the company are formally finalised.
A married couple and their son have been banned as company directors after failing to pay more than £186,000 in tax. Heather & Lance Shepherd and their son James Shepherd, who ran a company called Shepherd Security Ltd in Preston have been disqualified from acting as directors for a total of 15 years following an investigation by the insolvency service.
The Late Payments Directive, known more technically as Directive 2011/7/EU or the Late Payment of Commercial Debts Regulations 2013, came into force on March 16th and should mean better protection for businesses of all sizes - from freelancers to big brands, and including the public sector - when chasing late payments.
Generally speaking, the Directive puts 30-day payment terms on contracts where a longer deadline is not mutually agreed, and allows you to charge fixed fees, statutory interest, and reasonable recovery costs on any action you take after that deadline has passed.
At some point in the life of every business they will face difficulties in getting a client to settle an invoice.
Now you are faced with the very real prospect that this unpaid invoice may become a bad debt and bad debts can cripple an otherwise profitable venture.
Remember Dodgy Dave, the debt collector you don't want to meet? Well, we described that article as "a work of fiction" but warned "this kind of person is out there".
Now it seems Slippery Stu - or, to use his real name, Stuart Paul Cooper - is a real-world example of the kinds of debt collecting 'methods' we outlined in our Dodgy Dave article.
Take one technology, media and politics website. Add a 28-year-old online entrepreneur who used to be called Milo Wagner, but is now called Milo Yiannopoulos. Don't add any paid invoices to freelance contributors - these could leave a sour taste in the mouth. Finish with an unpaid editor and a legal claim for £16,853.
You've got The Kernel's secret recipe, and it's one that's been stewing for some time. Contributors have reportedly been disputing payments for several months, and an estimated £10,000 or more is still owed to past writers and in copyright claims to photographers whose works were allegedly used without permission.
Cashflow is the very lifeblood of your business, if it runs low a business will struggle to continue. If it runs out it will cause a corporate “heart attack” and kill even a profitable business stone dead.
So what can you do to minimise the impact on your business when you are faced with a short term cashflow problem?
When late payment goes beyond the limits of amicable pursuit, and it becomes apparent that the funds will never be willingly forthcoming, the remaining option is to go to court, in order to force the debtor to pay.
Depending on how much you are owed, you may be able to do this in small claims court, or you might have to launch more formal legal proceedings, which are likely to prove more expensive.
The so-called 'Late Payment Directive', officially named Directive 2011/7/EU on Combating Late Payment in Commercial Transactions, is due to come into effect in less than a month's time, on March 16th 2013.
With just 24 days to go until that time, the Department for Business, Innovation and Skills has revealed the results of its recent consultation on the Directive, along with the finalised set of regulations that will be introduced in March.
Small to medium-sized enterprises (SMEs) are struggling to tackle late payments from clients who, in the worst instances, miss three or more invoices per year.
Almost half (47%) of SMEs surveyed by Barclays said that their least reliable customers fail to pay on time at least three times each year.