Smaller firms often find it hard to force their larger customers to keep to agreed payment terms. Smaller suppliers rarely make a legal challenge to try to impose interest charges on late payments although they are quite legally able to do this.
So the result of banks either increasing their interest rates and the buyers taking longer to pay gives companies cash flow problems. It is usually when it is too late that SMEs pay attention to cash flow. They are so busy managing other parts of their business that they take their eye off the ball. For this reason, many companies are in danger of going bankrupt even if they have a healthy business
When cash flow dries up, a business is left drowning, the game is over ! A company credit check can be made during trading with a company as well as being part of the decision making process of deciding if you should trade with a new business. Don’t forget that a business credit check is historical and the information can be over a year old.
http://www.due2pay.co.uk/ is offering a different type of service to UK limited companies. Their web site will take details of late payments, they will email and fax the customer to remind them that monies owed is due. If the invoice remains unpaid, other members will have site of the fact (the amount of the invoice is not shown). The other members will then be able to contact the supplier and the customer if they wish. The Watch List of DUE2PAY is proving popular. Members can create a WATCHLIST of companies which they want to keep an eye on. As soon as a company is listed as a late payer, members with that company on their watch list will receive an email telling them that that a company they are watching has been listed on DUE2PAY.
It is common to find that your debtor is also in debt to other companies, if you delay in addressing any late payments, the debtor may be wound up or go bankrupt before you have the chance to recover monies owed to you.
Liquidity is the key to survival today. There are several methods of managing debt recovery of overdue accounts, a useful way is to factor invoices though the percentage take of those offering the service may be considered high especially in low margin businesses. Solicitor’s letters are almost one off methods which still rely on you and the solicitor to monitor accounts. Some companies are offering a debt collection service for a monthly fee, they will chase your invoices for you.
Managing working capital will give any business with the cash resources to contine to trade.
A bad debt uses valuable internal company resources in chasing the debt.
Less considered methods of improving liquidity is timing of salary payment to the receipt of guaranteed payment of suppliers. Increasing order size from your own suppliers negotiated with a decrease in price and extended payment terms (be careful of overstocking) , taking stock from suppliers and paying for it is when it is used (your supplier is effectively using you as a storage facility), reducing your own stock levels and having suppliers deliver smaller amounts just when you need it.
Monday 27 October 2008
Thursday 23 October 2008
Late Business Payment
From www.due2pay.co.uk, the easy way to manage late payment. Follow the link to find a 60 day free trial and a low monthly membership for features to help your business.
The business world is a two way affair between Customers and Suppliers. Whilst things look gloomy on the payment front, customers will look at legitimate ways to delay payment.
Legitimate ? ? Yes, they may ask for extended terms. They will want to do this to create a buffer in their business. They don't want to be subjected to business debt collection agencies knocking on their door. They don't want to have a company credit check show them as a bad risk.
Banks have been concentrating on quantity of loans and will now look closely at the quality of loans with their accounts. A shift may take place to convert interest only loans into other types certainly ones which show payment to the capital. Banks will not be too concerned about losing customers who don’t like it as other banks will not want to pick up the business.
The credit cycle is tightening, it’s a knock on effect.
One business starts to tighten its terms and it cascades right down the supply chain.
Make sure you and your staff are on the watch out for the tell tale signs of late payment. These are numerous, amongst them are late delivery of cheques, bouncing cheques and excuses over the telephone.
Look at your existing businesses now, any which are showing signs of slowing their payment should be monitored regularly. Overdue Accounts which are allowed to stay that way are difficult to turn round. Don’t forget that if customer has problems now in paying outstanding debts, then it will be hard to catch up unless his customers start to pay monies owed to him on time.
Debt recovery from a company on the slide is a hard thing especially if they have been with you for a long time. Tough decisions need to be made especially if you have developed close personal times with the key players.
New customers need to be subjected to a normal company credit check there is no harm in vetting them using other industry sources. Information can be gleaned from Companies House and any of the other credit referencing companies which use their information.
The business world is a two way affair between Customers and Suppliers. Whilst things look gloomy on the payment front, customers will look at legitimate ways to delay payment.
Legitimate ? ? Yes, they may ask for extended terms. They will want to do this to create a buffer in their business. They don't want to be subjected to business debt collection agencies knocking on their door. They don't want to have a company credit check show them as a bad risk.
Banks have been concentrating on quantity of loans and will now look closely at the quality of loans with their accounts. A shift may take place to convert interest only loans into other types certainly ones which show payment to the capital. Banks will not be too concerned about losing customers who don’t like it as other banks will not want to pick up the business.
The credit cycle is tightening, it’s a knock on effect.
One business starts to tighten its terms and it cascades right down the supply chain.
Make sure you and your staff are on the watch out for the tell tale signs of late payment. These are numerous, amongst them are late delivery of cheques, bouncing cheques and excuses over the telephone.
Look at your existing businesses now, any which are showing signs of slowing their payment should be monitored regularly. Overdue Accounts which are allowed to stay that way are difficult to turn round. Don’t forget that if customer has problems now in paying outstanding debts, then it will be hard to catch up unless his customers start to pay monies owed to him on time.
Debt recovery from a company on the slide is a hard thing especially if they have been with you for a long time. Tough decisions need to be made especially if you have developed close personal times with the key players.
New customers need to be subjected to a normal company credit check there is no harm in vetting them using other industry sources. Information can be gleaned from Companies House and any of the other credit referencing companies which use their information.
Tuesday 14 October 2008
More Features than a Solicitor's Letter
DUE2PAY's services have been described as being more punchy with more features than a Solicitor's Letter.
Originally conceived as a bolt on to exisiting credit referencing and credit checking, DUE2PAY is an important tool for Companies which want to keep track of their customers which may start to pay their bills late. It is just as important to check on companies you may wish to do business with.
Stop a moment to think how much time and money is spent on your phone calls, faxes, visits and solicitor letters. Just one late payer can cost you well over £100 which is near enough the annual cost of being a member of DUE2PAY.
Vetting of new customers can be a slow tedious affair.
Recovery of monies owed and its collection can be handed over to a third party though this still involves the supplier in a lot of work. There is nowhere else that you can turn to find up to date information on Late Payers.
As long as there is no dispute over your invoices or transactions, you can let your supplier know that you want your money on time. DUE2PAY's simple interface allows you to take control.
If you do not have any overdue accounts, you can still join up and use the Watch List feature which will keep you informed whenever a company is listed as a late payer.
Originally conceived as a bolt on to exisiting credit referencing and credit checking, DUE2PAY is an important tool for Companies which want to keep track of their customers which may start to pay their bills late. It is just as important to check on companies you may wish to do business with.
Stop a moment to think how much time and money is spent on your phone calls, faxes, visits and solicitor letters. Just one late payer can cost you well over £100 which is near enough the annual cost of being a member of DUE2PAY.
Vetting of new customers can be a slow tedious affair.
Recovery of monies owed and its collection can be handed over to a third party though this still involves the supplier in a lot of work. There is nowhere else that you can turn to find up to date information on Late Payers.
As long as there is no dispute over your invoices or transactions, you can let your supplier know that you want your money on time. DUE2PAY's simple interface allows you to take control.
If you do not have any overdue accounts, you can still join up and use the Watch List feature which will keep you informed whenever a company is listed as a late payer.
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