Last week, the Forum of Private Business published an interview with Hampshire businessman Peter Darcy, who runs Gosport-based Peter Darcy Industrial Training Services.
He appeared on BBC Radio Solent’s business breakfast show recently, where he spoke of the difficulties he encounters with late payment from clients – including one outstanding invoice that has taken three years of chasing, and still has not been settled.
Mr Darcy bemoaned the late payment culture that exists among larger firms, some of whom he claimed deliberately delay payment because they “like to make you wait”.
This week, we will be looking at some of the problems faced by Mr Darcy, as well as the ways in which businesses of all sizes can use effective credit control and debt collection procedures to make sure invoices do not remain unpaid for any longer than is necessary.
But first, let’s take a general look at some of the problems raised by Mr Darcy in his BBC interview.
‘Larger firms are the worst offenders’
Mr Darcy blamed many of his late payments on his bigger clients – but in many cases, it seems their non-payment might not have been deliberate.
He added that invoices can become lost in larger offices, are sometimes delivered to the wrong person, or simply sit in an in-tray waiting to be dealt with, before being overlooked.
‘They like to make you wait’
Some companies delay payment deliberately, according to the businessman, including one large client of his who got in touch to arrange for further work.
When Mr Darcy told them they had an outstanding invoice, they claimed to have no record of the original work – which took place three years ago – and could not find a suitable member of staff to double-check with.
“I don’t think I’m going to get paid that one,” Mr Darcy admitted in his BBC interview.
‘New owners won’t pay’
When a firm changes hands, the new owner is reluctant to settle any outstanding invoices, Mr Darcy says.
“It’s often not that they don’t want to pay; it’s that the person who is dealing with it doesn’t care, or doesn’t realise the impact their not paying has on a small firm.”
This issue, Mr Darcy says, has become more significant over the past two or three years, as more of his clients have changed ownership during the economic turbulence.
‘The left hand doesn’t know what the right is doing’
Akin to the problems seen in larger firms, disorganisation at all levels can be a problem – and Mr Darcy says “it’s often not that they don’t want to pay”.
However, even with the best of intentions, a variety of different problems can lead to invoices going unpaid, and the businessman adds that he spends large amounts of his time chasing late payment from clients.
Credit Control and Debt Collection
None of Mr Darcy’s problems are new to us – it seems whatever the size of company, whether or not they want to pay, there’s always an excuse for why their funds are late arriving into your account.
Over the remainder of this week, we will be looking at each of the above issues in more detail, and telling you how to go about overcoming those obstacles when you encounter them from your own clients.