Top ten tips to avoid late payment
Bacs has developed some handy hints designed
to help you fight back against late payment.
When you’re paid electronically, the funds are
cleared and available for use on the day they're received.
2. Be proactive
Always chase early. A polite call or
email can often pre-empt a payment problem. Regular conversations will also help build positive relationships with your customers’ accounts departments.
3. Do your homework
Avoid risks when supplying new
customers by running a credit check. There are many associations and independent
bodies, for example Companies House, which can provide status reports for a
reasonable fee. This upfront insight is worth its weight; if you knew a
company had experienced financial problems in the past, would you still give
them 30 days credit?
4. Demand interest
Demand interest on late payments –
you are legally entitled to it. And if you have customers who
regularly pay you late, you should get familiar with UK business law as a matter
of course. You can find government advice here.
5. Control incoming payments
If your clients and customers pay you by Direct Debit, you’ll know when the funds will be due to land which will help with your cashflow planning. Find out more about how to access Direct Debit.
6. Take the credit
Using Bacs Direct Credit, customers can pay you straight into your bank account – it’s easy for them and simple for you. Simply include your sort code, and account number, and account name on all your invoices, along with a note to encourage payment directly into your bank account.
7. Help the environment – and save money for you and your customers, too
Automated payments eliminate paper use as well as reducing postage and other administrative costs.
8. Better payment terms
Save your own suppliers
time and money by paying them using Bacs Direct Credit and settling your regular
business bills by Direct Debit. This approach could help you negotiate better
payment terms and avoid penalty charges on any overdue invoices or bills. You’ll
need their sort code, account number and account name. Ask for a copy of
their paying in slip or request written confirmation from a company official on
the organisation’s headed paper to ensure all details are correct and to avoid
9. You win, we all win
If you get a reputation as a late
payer, word will eventually get around. If all businesses use the tools at hand
to settle accounts quickly and efficiently, the economy as a whole will feel the
benefit with positive spin-offs all round. And why not reward your prompt
payers? Discounts will encourage them and keep the money flowing in.
10. Take action
Smaller businesses struggling with overdue payments can get help from the Small Business Commissioner’s office.