A report written in conjuction with The Small Business Commissioner (SBC) surveyed SMEs on their experiences of unfair payment practices. It found that over 75% of SMEs are afraid of taking action against late paying clients at the risk of losing them.
This report is quite timely as the Prompt Payment Code (PPC) produced their July report showing 18 businesses who have penalised for failing to pay their suppliers on time leading to them being removed from the code itself.
The SBC report also discovered that 43% of SMEs said they experienced late payment issues for goods and services from larger companies with 76% saying that,
"Not getting paid at all for their work was a significant issue for their business.", SBC/Growth Street Report
Almost 50% of medium businesses have been exposed to either late or unfair payment practices from larger businesses whilst 38% of small businesses reporting the same.
And the primary reason SMEs are reluctant to act on unpaid invoices is from fear of damaging their client relationships. The second reason for not escalating unpaid or late invoices from clients was around damaging the likelihood of ever getting paid.
The majority of businesses involved in the survey had payment terms of up to 30 days whilst only a small number of SMEs confirmed that their agreed supplier payment terms were 60 days and above.
Although it is sometimes painful to chase for outstanding invoices it is the lifeblood of your business. Without a tight credit control process your business is at risk of failing due to insufficient cashflow. If you've delivered a product or service, you deserve the right to be paid on-time. And if you are not, then in accordance with the PPC and general ethics of business, you have the right to chase and employ debt collection procedures to settle outstanding balances.
Employing an outsourced credit control company to take away that awkwardness and pressure is sometimes helpful as their are no emotions invested in the transaction. And a lot of the time SMEs are too close to their clients. Through using debt collection and credit control experts, they can collect your outstanding invoice debt efficiently and professionaly with client courtesy at the forefront.
For help with getting your outstanding invoice debts collected firmly but professionally, speak to us on 0208 720 7309 or email firstname.lastname@example.org