As we move into the second month of the new year, those of you who operate on 30-day payment terms are likely to be reaching your first invoice deadlines – giving you a first glimpse at how likely your customer base are to miss the payment date.
If you notice an increase in late or non-payment, it could be time to reassess how generous you are in waiting for the money to arrive.
With the right terms and conditions, selling online doesn’t have to be excessively risky – but it is important to know where you stand if you supply goods over a long distance, for instance, and the payment does not arrive on time.
In 2016 the likelihood of this happening could be substantially higher than it was at this point in 2015, as figures from Confused.com reveal that one in five Britons believe they are financially worse off than they were 12 months ago.
Some 21% overspent in the run-up to Christmas, and 7% expected this to cause them financial difficulties as the new year got underway – something which is only just likely to be rearing its head for suppliers who invoice on 30-day payment terms.
To put this into even greater context, 17% of people spent more on credit cards this past Christmas than they did 12 months previously, and 28% spent more in December than any other month of the year.
One in nine of those surveyed believed they had blown their budget for Christmas by more than £1,000, and on average the overspend was £543, with 7% of people predicting they will not have cleared their credit card debt by the time Christmas comes around again.
By drawing up the correct terms and conditions selling online to individuals – and even to small businesses whose finances might be linked closely with those of the owner – does not have to be unduly risky.
The right Ts & Cs can make clear that you retain ownership of goods until they have been paid for – even after they have been delivered – allowing you to recover them in the worst instances of non-payment.
Alternatively, you can set out certain additional charges to recoup costs, for example due to bespoke items that cannot be resold, even if they are returned; these extra fees might not be clear within the legislation on late payments, so it is important to get your customers to agree to them upfront if you want to be able to charge for them later.
Ultimately, having Ts & Cs in place from the outset simply sends a clear message that you are professional and expect to be paid in full and on time, while fulfilling your side of the bargain too – and where this is called into dispute in an attempt to delay payment, it gives you something to fall back on in proving what you were contracted to provide.