Too many overdue invoices?
More than ever businesses are currently experiencing the late payment of their sales invoices more and more regularly. There are numerous ways in which you can speed up the receipt of cash coming into your business from those who are late or slow at paying you. I do find that different business sectors will have differing experiences, in general the following should speed the process up:
Early settlement discount
More and more companies are starting to offer a discount of between five and 10 per cent as long as payment is received within say 14 days, the discount will apply. This mechanism should not affect your turnover value as you should increase you original selling price to compensate.
Statutory late payment interest and/or surcharge
The use of the statutory late payment interest can be applied to any late invoices that have been outstanding past the due date of payment. This is calculated at 8% above the Bank of England base rate and is prorated.
Outsource your credit control
There are numerous credit control businesses sprouting up, these work on your behalf and chase those invoices that are late, allowing you to concentrate on your day to day work.
Standing order / Direct Debit originator
It may be possible to work out a fixed fee for the year and apply a standing order system; this would ease the cash flow for both parties.
If your business is large enough it may be an idea to become a Direct Debit originator. Subject to the rules of Direct Debit you are able to control the amounts of money that are deducted from your customer’s bank account. The set up cost of this is in the region of £4,000.
Keep in touch with your customers
A monthly statement is a constant reminder of the amount of money that they owe to you and should always be top of their list of payments to make.