Industrial training services provider Peter Darcy told BBC Radio Solent recently of several of the problems he encounters relating to late payment from clients – although, in many of the cases he cited, it seems not a case of late payment, but one of not being paid at all.
One particular issue he raised is that of changing ownership, where a client is taken under new management. You might think this would be a rare occurrence, but in the current economic climate, many firms are nearing insolvency before being bought out, or are simply being sold to new owners without entering financial difficulty.
It’s a time of change throughout the UK economy, and it’s important to be able to keep up with that change if you are a creditor of a company that’s due to change hands.
However, many of the same rules still apply in terms of maximising your chances of a prompt payment – so don’t let a simple change of ownership complicate your credit control processes too much.
‘They don’t care’
Mr Darcy says that, when companies change hands, “it’s often … that the person who is dealing with [invoicing] doesn’t care, or doesn’t realise the impact their not paying has on a small firm”.
You can help to overcome this by being firm but polite in your dealings with the new owners – remember, it is likely to be a time of genuine upheaval and a settling-in period is inevitable, but you still have a right to receive payment for any work you have done or services you have provided.
Try to re-establish contact with the appropriate person for invoicing – whether that is a senior manager, or somebody in the accounts department – and make sure they have copies of your invoices and acknowledge receipt of them.
Depending on the importance of the client to your company, you might want to reissue the outstanding invoices with a new deadline, or you may want to try and enforce the existing payment dates if you think the new owners will pay promptly.
Proactive payment chasing
Of course, prevention is better than cure – and if you can keep on top of your credit control from the outset, you stand a better chance of receiving payment for outstanding invoices before any change of ownership takes place.
Again, it’s a case of making sure invoices are received correctly, and that receipt is confirmed by the client. If they don’t pay on time, or when you would normally expect payment to be made, chase them up politely but firmly.
Try always to get a specific date set on which the money should arrive into your account – and don’t be afraid to take action if you’re not happy with any change to the originally agreed payment terms.
Legal action should be seen as a last resort, but a solicitor’s letter can often help to indicate to the client that you are not going to give up on receiving your money. Most companies and individuals will not want to go to court to defend non-payment on an invoice when they have no legitimate reason for not having paid.