Late payments take their toll on owners and managers in theUK’s smallest companies, a Barclays survey reveals.
One in five have suffered from extreme levels of stress because of non-paying clients, while 11% have been driven to the very brink of insolvency, and 22% have refused business to those clients in the future.
Very nearly all businesses have had to deal with late payments in the past two years – 85% of all those surveyed, 47% of whom have been hit by non-payment three or more times by the same customer in a single year.
“Minimising late payments and effectively managing cash flow is crucial for the survival, as well as the growth, of small businesses,” says Barclays’ managing director of business banking Sue Hayes.
However, the survey found owners and managers take very different courses of action when attempting to recover the money they are owed by clients.
In addition to the 22% who refuse to work for that customer again, 30% have asked for payment in advance on future work, 32% have commenced legal action, and 60% have chased for payment via the customer’s finance team.
The statistics show the value of a proactive approach to late payments – either by ensuring invoices are correctly processed and settled on time in the first instance, or by pursuing non-paying clients in the appropriate way, without any additional unnecessary delays.
By enlisting the services of a third-party credit control specialist like the Cash Protection Agency, you can put such processes in place without needing to know the legalities for yourself, and without increasing your personal admin burden.