Why is that?
Scared of alienating customers?
Yes, chasing overdue payment is like a double edged sword – dammed if you do, dammed if you don’t.
All of the above are genuine reasons why SMEs aren’t chasing their unpaid invoices. However, as a result, individual businesses are losing thousands of pounds every year.
FACT: Over 70% of invoices last year were paid late!
So what can you do to avoid late payment, or make chasing overdue invoices easier?
Ensure Your Credit Terms Are Clear
Each and every invoice should clearly state your invoice payment terms and method of making payment.
If you have notoriously late paying customers consider imposing overdue charges under the Late Payment of Commercial Debts (Interest) Act 1998, to your T&Cs.
Ensure Your Invoice is Accurate
An invoice that is incorrect will not be paid. Check company name, address, PON, itemising, VAT values, totals are all present and correct.
Chase Outstanding Invoices Promptly
As soon as your invoice is overdue you must chase it. If you don’t another supplier will and the chances are they will be paid before you. Ideally, start with a polite and friendly phone call.
Second Round of Chasing
If you have not been paid, or not heard why you haven’t been paid, within 7 days of your first point of contact chase again. Phone, fax or letter – template letters are widely available, and free, online – this second point of contact should be more direct and formal.
If you are getting nowhere you could instruct a debt collector to act on your behalf; alternatively you could issue a letter through your solicitor. However, both of these are as a last resort.
However, there is an alternative...
Have you heard of invoice finance, also known as invoice factoring?
The most popular form of alternative finance in the UK market, over 44,000 UK businesses use invoice finance to ensure a fluid cashflow all year round, without any worry over late paying customers or uncomfortable chasing.
How? It advances you money on issued invoices.
Paying up to 90% of the value of your invoices.
Within 24hrs (paying the balance once your customer has paid)
The facility even deals with all the credit control aspects too. Invoice finance releases valuable funds you have tied up in invoices.
Even if your customers pay 60, 90 + days late!
It is not a loan. It does not require assets or long standing trading times.
As one of the UK’s few independent brokers, Capital Corporate Finance has access to all 50 UK invoice finance companies. We can arrange your facility within days – quicker than if you were to go directly, thanks to our fast track independent status.
So, unleash your invoice values to enable growth and stability by calling us on 07785 596053 or emailing Managing Director, Carole Roe, at firstname.lastname@example.org