Every day we hear from business owners who are coping with long payments and the term ‘late payment’. With more than 50,000 companies defaulting each year because of late payments by their customers, we share ways entrepreneurs can reduce the possibility of late payments. Although you should build a culture of good payment practices within your organization to support speedy bill settlement, the approach outlined above allows you to address some of the most common reasons why companies do not pay on time.
If your customer is having trouble with the flow of payments or simply cannot afford to pay an invoice in advance, setting up a payment plan can be helpful to ensure you get through. If you are in arrears with one of your bills or have difficulty keeping up with payments, you should offer payment plans. Even if you forget or fail to pay a customer because of his cash flow problem, try to create a payment plan with him that he can stick to.
Check your billing agreement with your electricity supplier to understand what happens if you are late paying.
If you’re used to receiving your bills by mail, show them to make sure you pay the bills for your next paycheck regularly. If you do not have enough money in your account to pay your bill, or if you have changed a few payments on the due date, contact your creditor. Even if your regular customers are always late paying, you can warn them that you will all stop the service until the additional payment is made. Once you know the exact reasons why you are not paying on time, you can convince your customers to pay their bills on time.
Chasing late payments is costly and frustrating, especially for companies with a recurring settlement model. If you don’t pay your bills on time because the expected payments don’t show up, you can ruin your company’s cash flow and send your business into a tailspin. If you don’t, the company can’t care if you get paid, and that’s frustrating. It’s time consuming and slows your cash flow for no reason, but it’s also frustrating for your employees and your customers.
This is why entrepreneurs of all sizes need to develop good accounting practices and keep their invoices up to date so that they can be paid on time. If your cash flow is affected by late payment of bills, you may want to consider invoice financing. Although large companies are notorious late payment operators, even small companies with a recurring settlement model and a single payment model have the ability to mitigate any liquidity problems that may arise from overdue or slow payments.
Many lenders impose maximum penalties and if you are one of them, you can expect to pay more if you don’t pay your bills on time. Remind your customers of the government’s Late Payment Policy, which requires them to charge you invoices and interest on unpaid bills: if your customer’s invoice is not paid on time, you are entitled to charge for it. APR will increase if even one late payment is made, regardless of whether you pay or not.
Monitoring UK companies to check for signs of financial distress is a useful precaution to help avoid late payers.
If you have other bills to pay, you must pay them on time or you could impose a fee if the bill arrives late. If you set a regular time for paying your bills, you can create a habit that will make you miss the due date. You will have no choice but to ask yourself whether you should continue to pay your bill – time, because you either have enough money to cover the amount due or pay another bill, and if so, how much you will pay in late payment. Almost any organisation can pay you by post, so you might want to consider bringing forward bills to avoid being penalised with late fees, even if it’s just for the company you pay.
No one wants to pay a late payment fee, but if this is done in advance, it can discourage customers from paying too late and help them pay early. Giving customers a reason to pay before the invoice is due can not only help reduce the frustration that comes with late payments at the end of the month, but also help reduce the liability of customers when they pay their bills late. Whether you speak to a bank, credit card company, insurance company or any other organization of a customer, customers will know that they are paying you less if you pay them late than their liabilities.
As late payment has a negative impact on cash flow as described above, it is obvious that a faster payment will have a corresponding positive impact on your company finances. If you know when your bills are due and get used to paying them before the deadline, you can reduce stress, improve your credit rating, save money and enable you to get lower interest rates in the future. If you have difficulty paying bills or loans on time or approaching lenders and creditors early, there are a number of ways to help you. If you are moving through a growing debt burden, you can get relief if you pay your bill on time and if it is paid on time, you can get rid of the options.