Late payments have always been a problem for businesses, but widespread late payments have become more prevalent in the last year. These are largely due to the Coronavirus pandemic that has greatly impacted many businesses over the past few years.
In addition, as many government support schemes are due to come to an end, late payment rates will likely continue to increase as it becomes harder for companies with cash flow issues to access the credit they need.
The IoD conducted a survey of company directors and found that over a third of them had faced an increase in late payments during the pandemic. This number is likely to only continue to grow as more companies face financial difficulty.
During the pandemic, many UK businesses utilised the emergency measures put in place by the Government to stay afloat. From furloughing staff to grants and loans. Now that the various schemes are ending, many fragile companies are at a high risk of failure.
Late Payment Culture
Has always been an issue for businesses, but the coronavirus pandemic has only exacerbated this problem. With late payment rates increasing and government schemes coming to an end, it is likely that late payments will become even more widespread in 2022. Credit control teams should be prepared for this potential outcome and do whatever they can to mitigate the risk of late payments.
How to Protect Your Business from Late Payments
There are a number of things that businesses can do to prevent late payments. These include:
Regular checking for late payment
Credit control teams need to be proactive and regularly check for late payments; even if you have not received an invoice from the client. It is important to monitor all credit balances in order to ensure that your business is not left out of pocket.
Build a good relationship with clients
If you have a good relationship with your clients, they are more likely to pay on time. Building trust is key and can be done by being transparent about late payment penalties and ensuring that invoices are clear and easy to understand.
Ignored debts won’t pay themselves!
The longer an invoice remains outstanding, the less likely and harder it is to receive payment. This is why it is important to take swift action when an invoice goes overdue. Credit control teams should be persistent in their attempts to contact the debtor; and ensure that all communication channels are utilised.
If you’re struggling to collect overdue invoices internally, consider the benefits your business could gain from partnering with a debt collection agency. They will bring years of knowledge and expertise to the process and give you back precious time to focus on your business.
My Debt Recovery Services
If your customer(s) still won’t pay? This is where My Debt Recovery comes in.
Using a professional debt collection specialist, like My Debt Recovery, is a proven way of collecting outstanding debts. We have a proven track record of recovering debts quickly and efficiently on behalf of our clients.
We operate on a no collection, no fee basis. You can rest assured that we will make every effort to recover your debt.
So, whether you are looking to recover a single debt or multiple debts, My Debt Recovery can help. Contact our team today to get the ball rolling. Stay up to date with our latest insights on our LinkedIn page.