Maintaining a healthy cash flow is vital for organizations of any size. As soon as funds run down, problems can arise. It is no surprise then that bosses tend to lose their patience when they have to chase late payments. In some cases, bosses contact solicitors online to help with debt recovery.
Getting legal solicitors involved can help companies to recover more money, and it also makes managers’ lives easier. Rather than focussing on chasing the cash owed to them, they can devote their time to getting new business and performing other tasks.
Commenting on the issue of late payments, a recent Guardian article suggested that the credit crunch heralded a “new era of bad practices”. The publication remarked: “There’s no point running a business unless you get paid, but ensuring a client pays on time appears to be getting harder.”
It cited figures provided by payment company Bacs, which has been monitoring this issue since 2007. According to the firm, in the pre-recession days, small businesses were owed a combined total of around £16 billion in late or unpaid invoices. By 2011, this sum had risen to over £30 billion and it has not fallen below this level since.
The latest survey released by Bacs shows that small businesses in the UK are owed £30.2 billion. Also, nearly one million firms are suffering late payments.
One man who knows all about late payments is Arnab Dutt, the managing director of Texane. This small manufacturing business, which specialises in making polyurethane wheels for escalators, regularly suffers as a result of tardy payments. According to Mr Dutt, larger enterprises are the worst culprits.
He remarked: “Big PLCs continue to use small businesses as an alternative to banks and they should be named and shamed.”
According to the businessman, small firms lack the power to take on big corporate organisations. He wants to see a regulator brought in for late payments. On this subject, he said: “I believe there should be a third party for whistle blowers to go to anonymously and provide evidence of late payment. Unless we name and shame them this will go on and businesses will go to the wall. It’s really damaging the UK economy.”
Mr Dutt is certainly not alone in his calls. Fellow businessman Jon Priest, who is the chief executive officer of market research firm SPA Future Thinking, noted that while small clients tend to be “pretty good payers”, larger enterprises will often only offer 90-day payment terms.
He also suggested that big companies are well versed in stalling tactics. On this topic, he commented: “If there’s an error or a query with an invoice, they won’t inform you until the 89th day. Then your invoice is put at the bottom of the pile and you can wait another 90 days.”
By turning to lawyers online to help them chase up late payments, bosses can make their lives that little bit easier. Also, they can send out a message to companies that it is not acceptable to leave debts unpaid.
About the Author – Anna Long din is a freelance blogger who contributes regularly to a variety of legal websites, including Dutton Gregory LLP.