The government was this week called to focus on educating the smallest businesses, such as self-employed freelancers, on ways to protect their cashflow, rather than coming up with a new levy to impose on late payers.
Here, debt recovery firm Lovetts, which sounded the call, reveals how such independent businesses can “get the basics right” on their contracts and communications with clients, to stand a better chance of getting paid in full and on time.
1. At the outset make sure the customer understands
that legitimate costs, compensation and interest will be claimed if late
payment occurs - get it in your Ts and Cs.
2. Don't be afraid, make sure they understand very clearly that this will form the basis of your trading relationship
Having done this:
- Invoice and in the same month call or email to check the invoice has arrived with the right person to approve
- Focus on the usual suspects
- As soon as it becomes overdue, call the customer to remind them that Late Payment compensation and interest are due on each invoice - give them the cost they could incur if they don't pay up
- Make no bones about the fact these will be claimed if it goes to legal, then dangle a carrot and offer to waive compensation if immediate payment is made
- If it helps, explain that compensation is to pay the costs of running a credit control team
- If payment isn't made, warn of the additional recovery and/or legal costs that will be due in addition to Late Payment compensation
- Go legal when you say you will. If you don't act on your threat your invoices will always remain at the bottom of the pile
- Act decisively and it will change your business culture and your customer relationships while reducing late payment for your business.