Top Tips
Bibby helps beat the late payment culprits
In the wake of a recent industry report*, which accuses the UK’s largest
companies of ‘strangling’ smaller enterprises and conducting business
unfairly, Bibby Financial Services is urging owners and managers to stand
firm over unfair treatment and late payment from their larger
counterparts.
Accounting for over 95% of the UK's 3.7 million businesses and
employing 12.6 million people**, large corporates must wake up to the
importance of small business contribution to the prosperity of the
economy. David Robertson, chief executive of Bibby Financial
Services, believes respecting their smaller counterparts and operating on
fair contractual terms is fundamental for larger companies hoping to
maintain a reputation for good business practice.
Robertson said: “Small business owners and managers rely on a healthy,
steady cash flow, and timely payment of invoices is crucial to sustain and
keep them moving forward. Unfortunately, many owners and managers
feel bullied by their larger counterparts, fearing that chasing late
payments could damage relationships and result in the loss of a major
contract.”
However, small business owners and managers can reduce the risk of falling
into the late payment trap by ensuring their financial procedures are in
order. To help them Bibby Financial Services has devised the
following top tips:
Agree payment terms and conditions – set out from the
start of the relationship, ensure the terms and conditions are clearly
stated on all relevant documentation. This will help limit liability
and provide security
Timing of invoices – send invoices immediately and always
follow up with a telephone call to check receipt of invoice and when
payment will be received
Communication – forge good working relationships with
customers and suppliers to make it easier to resolve payment
problems. Establishing a good rapport with your customer makes the
process of collection easier and less awkward
Clarity of documentation – document and log all
conversations/emails and keep a clear record of payments made, so you are
able to monitor invoice status quickly and efficiently
Understand you legal rights – understand your rights as a
small business, establishing if the client can be charged interest on any
late payments you are owed
Offer incentives – try to reward customers who pay in good
time, and perhaps offer discounts to those who pay early or who are
consistently meeting your payment terms
Weigh up the finance options – there are financiers who
can help with funding and invoice collection. For example, invoice
financiers can help improve cash flow by releasing cash tied up in unpaid
invoices – up to 85% of those invoices as they are raised.
Outstanding payments can also be chased by the invoice financer freeing up
your valuable time management
David Robertson concludes: “It is both good practice, and a legal
requirement, for large companies to offer and meet payment terms in an
agreed period when dealing with a smaller business. Research shows
corporates typically take 64 days* to pay invoices, and while bigger
businesses are able to work under these terms, smaller companies need to
balance their books to carry on functioning.”
“However, it is not all bad news, larger companies can provide an
excellent source of revenue for smaller businesses, providing the
relationship starts on the right footing with fair financial practices
agreed and adhered to from the outset.”
For further information on financing your business, contact Bibby Financial
Services on Tel: 0800 91 95 92
