January 31st is a key tax deadline each year for anyone who files their accounts via self-assessment, but does it have an impact on the payment terms small businesses use?
The landmark date is one of the first major milestones of the new calendar year – and is technically not one deadline, but three.
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.
Bank holidays have long been a possible reason why payment terms might be ignored – the extra delay caused by being unable to get to the bank, usually immediately following a weekend when it may have been closed anyway, has been a common cause of late payments for generations.
Professional debt collectors could teach a thing or two in terms of the credit control London banks and central government offices carry out, as research reveals they score higher than both groups on the Citizens Advice Bureau’s approval ratings.
Your terms and conditions of service are an opportunity to do more than just set out the expectations of both parties involved in a particular business transaction.
HSBC have told business banking customers that they may be entitled to a refund on any fees incurred during a recent online banking outage.
Around lunchtime on January 5th, the HSBC UK Business Twitter account tweeted: “We have identified an internal technical issue with our online banking services and are working very hard to resolve the issue. We appreciate your patience while we rectify this issue and can’t apologise enough for the disruption this is causing.”
An increase in the Bank of England base rate of interest is increasingly likely, following an extended period at its historically low level of 0.5% – but how might this affect credit control in work at home jobs?
There may not seem like a direct link between the two issues, but for people who work at home, there is often a much closer relationship between their domestic finances and their job, particularly for those who are self-employed or who work on a freelance basis.
For those people, their home is also their office, and a base rate rise could have a direct impact on their business overheads as a consequence of higher mortgage repayments.
There is a growing need to choose the correct payment terms for invoices to individuals, following several years of entrepreneurial spirit in the UK workforce.
Since the onset of the recession in 2007-08, and the rise in redundancies during the worst economic period, many Brits have created jobs or incomes of their own – and several different terms are bandied about for this.
In general, these self-employed individuals may be referred to as freelancers or contractors, while those who are more organised in their branding are often called micro-businesses, especially if they have been successful enough to hire an assistant.
Depending on your industry, you might also supply certain other individuals who are effectively ‘just people’ – for example, reluctant landlords who have been forced to rent out a spare room to make ends meet.
Meeting credit control targets is no easy feat at the best of times, but once you factor in the human impact, it can be very difficult to predict exactly when you will get paid for any particular invoice.
It’s helpful to look out for certain ‘characters’ among your customers – because ultimately, many people fall into the same few groups in terms of their payment habits.
If you do not have an up-to-date terms and conditions letter, we would highly recommend getting one as 2016 gets underway.
All businesses, big and small, should have clear terms and conditions in place, especially when it comes to payment terms and the penalties of non-payment.
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