It might shock you to learn that over 50,000 small businesses go bust every year due to late invoice payments.
That’s a lot.
The cost to the economy is a staggering £2.5 billion as a result of this, but the cost to the individual can be catastrophic.
Through no fault of their own, small business owners can end up struggling to pay bills, being forced to let staff go and ultimately ceasing to exist.
On a personal level this could mean losing a home, spiraling into debt or even developing mental health problems. It’s a slippery slope.
All this because of late payments from larger companies who, quite frankly, can afford to hang around with their invoices.
It doesn’t seem right and it certainly isn’t fair, but it is becoming a really big problem.
Looking at 2017 in isolation, only 52% of invoices were actually paid on time. This shows a huge lack of respect for the ‘little guys’ in the supply chain, and actually indicates a lack of understanding from the major players.
Do they not realise that without these small businesses, their business wouldn’t be able to thrive?
Perhaps they see the little fish as dispensable, easily transferrable.
Maybe it’s just oversight.
Whatever the reason, change is needed to ensure small business owners are afforded some kind of assurances and protection that their invoices will actually get paid.
And change is afoot.
Philip Hammond, speaking on behalf of the Government, recently said that every large company must appoint a director to be responsible for the management of late payments to small businesses.
How far along this process we have travelled is yet to be confirmed, but it shows the early signs of a commitment to supporting small businesses and recognising their true worth within the supply chain.
At Court Enforcement Specialists, we work with many small businesses to help them settle their invoices on time, retrieve unpaid debts and ensure their cash flow isn’t stemmed unnecessarily.
Firstly we advise our clients to sort their T&Cs out. To review them, update them and to ensure their clients actually read them as well. Often, the problem they are facing is of their own making and without careful attention to detail, they’re making a rod for their own back.
Do their due diligence. We encourage our clients to forget the happy feeling that comes with securing a new client, at least until they’ve done their homework with credit checks and references.
Chase up their late payments. Of course, we’re always happy to help with that.
Reduce credit terms for repeat offenders. They’ll soon get the message.
Finally, the key to a happy supply chain is the establishment and maintenance of good working relationships. Without those, late payments, nonpayment and other B2B issues are almost inevitabilities.
CES know the value of the little guy and will always do our best to stand up for businesses and business owners, big and small.
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