Did you know that small businesses are waiting on average 72 days before receiving payment? In order to help, the government has and will be enforcing new measures, including:
- Amended late payment legislation, which came into force in March 2013. The rules are simple – debtors will be forced to pay interest and reimburse reasonable recovery costs of the business if they don’t pay for goods and services on time. This means that payment must be made in 60 days for businesses and 30 days for public authorities.
- In addition, a Small business Commissioner will be appointed and they will provide advice and be the first point of contact for small businesses. In addition, they will offer mediation on a voluntary basis, as well as handle and investigate complaints.
In the meantime, what can you realistically do? Well, try these 5 Top Tips from Dawn…
5 Top Tips that REALLY CAN make a difference to your business …..
- Negotiate your payment terms and conditions with clients and suppliers at the start of your working relationship. The maximum is 30 days for public sector and 60 days for other businesses.
- Make sure you issue your invoices immediately and they contain the correct information including details requested by your client or supplier.
- Make sure your invoices contain details of the statutory interest that can be charged which is 8% over the Bank of England rate.
- Remember you can also charge a fixed charge of between £40 and £100 depending on the amount of the debt.
- Be prepared to carry through the interest and debt measures.
When considering your business processes, some questions to ask yourself include:
- Do you negotiate your terms of payment with your clients and suppliers from the start of your working relationship? Does doing this frighten you?
- Do you understand the payment method with your suppliers? (Payable order details, invoice payment cut-off date and invoice sent electronically or by post.) Do you know what these terms mean? Did you answer Yes or No to this question?
- What do you do when payment isn’t made on time? Talk to us about your options.
Being paid late is unacceptable. You have worked hard, be paid on time. So let Focus Port at The Real Business Club help you get paid on time. Improve your growth and productivity and don’t put your otherwise successful business at risk. Contact firstname.lastname@example.org.