Tuesday, 24 July 2012 11:25

Should I Just Keep Chasing Payments?

Gloomy news from the Forum of Private Business in recent weeks, as FTSE 100 companies are again being urged to abolish the late payments culture by settling their invoices on time, and banks are again being urged to lend more to cash-strapped small businesses.

In an ongoing climate of tight availability of finance in all its forms, and with outstanding invoices totaling tens of billions of pounds, it can be easy to wonder what's the point in chasing payments?

But with bank lending harder to access, and the big firms as reluctant as ever to part with their cash, battling the late payments culture by any means necessary could give you not only healthier cashflow, but the financial means by which to capitalise on your competitive edge as the nation's various industry sectors begin to return to health.

Looking away from the banks

While the FPB says many entrepreneurs will feel "vindicated" by the spotlight currently shining on banks' lending practices, its recent research also found many small-business owners are simply looking to other forms of funding.

"Many entrepreneurs alienated by mainstream lenders are more than willing to vote with their feet and explore newer, more innovative financial services less dependent on automated risk criteria," says senior policy adviser Alex Jackman.

He adds that "reducing business costs and making inroads into tackling the huge problem of late payment would also improve the situation greatly".

But setting lending to one side for a moment, are there still ways in which businesses can increase their available capital, without having to borrow?

Content continues below

Life Under the Late Payment of Commercial Debts Regulations 2013

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…

Austerity Hammers Efforts to Protect Public from Rogue Businesses

New figures from the Insolvency Service show a shocking decline in enforcement actions against unscrupulous businesses since the government’s austerity programme was introduced in 2010. According to…

Naming and Shaming as a Debt Collection Tool

Late payments are a burden that all businesses must bear, and we fully understand and appreciate the annoyance that they can cause to all of our clients, whether big or small. So when a customer…

Cash-Strapped Newcastle SMEs Turn to Pawn (Brokers)

SMEs in the north-east are stop-gapping their cash flow problems by turning to pawnbrokers, according to a report in local news publication The Journal. With bank lending hard to come by and many…

Playing FTSE

Only one in four FTSE 100 companies have signed up to the new Prompt Payment Code designed to ensure businesses settle their invoices on time, all of the time.

Despite this, FPB CEO Phil Orford says all big firms "could and should" sign up to the code, adding that they are "the true bastions of the UK's private sector".

But wait a minute, aren't these high-profile supporters of the PPC the very same organisations that have recently been accused of money laundering, rate fixing and failing to hit agreed SME lending targets?

So what really is the solution, if it doesn't rest with the banks?

Stand your ground

The point really is that, when you begin negotiating over prompt payments, you can often find yourself plunged into a haggling process where a big business customer will hold you to ransom, bartering you down on price while demanding invoicing periods of as long as 120 days - good for their coffers, but not great for small businesses' finances.

In these situations, it is important to stand firm and stay strong. Prompt payment is a right, not a privilege. You should not feel like you have to allow endless invoicing deadlines to your biggest customers - whose payments likely represent the largest portion of your income.

Be realistic about what it's worth agreeing to, and what will simply incur unacceptable costs on your part, and don't be afraid to chase a late payment - big businesses know the game, and they also know how to quit while they're ahead, so you could find you receive your money sooner than expected when the debt collection letters start to arrive.

Over 150 Years Of Industry Experience

Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.

Source The FPB articles one & two.

Image "Text Fist" by flickr user Andrew Mason is licensed under CC BY 2.0

8:00 - 20:00

8:00 - 20:00

Our Opening Hours Mon. - Fri.

+44 (0) 1772 454505

+44 (0) 1772 454505

Got questions? Call us today. No hard sell, guaranteed. 

© Safe Collections is a trading name of Safe Collections Limited. Incorporated 1984. Company Number: 01815264. VAT Number: GB407358159. All Rights Reserved.