Back in June of 2019, and before, we detailed the ongoing issue of customers and clients paying invoices up to 90 days after receipt. The article ‘The corrosive practice of late paying’ took into account government statistics that suggested this was on the increase and how, if any, what tips could be employed to remedy this problem – there was also new legislation to be introduced to assist businesses when chasing finance.
What has changed since that article?
- Unfortunately, there has been an increase in the average number of days between invoice issue and remittance
- The number of companies who have employed ‘up front payments’ for their clients has increased
- Account suspensions, in opposition to the information above, have decreased as a whole
As detailed there are steps you can take to help your business achieve its goals and decrease the chances of a continued late payment cycle:
- Shorten your invoice cycle – Most business work on a 30 days net policy. Dependant on invoice size, change the metric to 7 or 14 day turnaround.
- Suspend accounts of repeat abusers i.e. late paying customers – This is not an option for some business but, where possible, temporary of permanent suspension of accounts will ‘jolt’ your customer into action
- Up front payment – Again, maybe one that isn’t possible. however, the may very well be a good option for customers who are unwilling to pay on time regardless of their company turnover
If your business is suffering a cashflow issue due to the aforementioned, there are commercial products available to assist your business from short term cash flow products to invoice finance facilities. Most businesses choose invoice finance as the lender will release the finance almost immediately after receipt and will also take care of chasing the late paying client, a relief for some business owners.
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