Small Business Late Payment Problems

ajaim2011

Hi,

I'm trying to improve the cashflow in my company and I'm dealing with overdue invoices from months ago. Some of the amounts are fairly small but collectively they add up.

I have called and emailed a certain company and given them ultimatums - referring to legislation - all of which have been ignored. I wish to tell them that I shall pass their details on to credit reference agencies, but I'm not sure how to go about doing it. Is this something I can do? Is there a way to get them to pick up the phone? Answer an email?

As I understand their company is still a going concern, they're just being ignorant.

Regards.

steve1980

Send a letter giving 14 days to pay otherwise you'll be sending round the bailiffs.

paddyrg

Your bank probably has a wing that takes non-payers and buys the debts for less than the face value. Have you got all the invoices in order and there is no question of non-receipt of the goods or services? If so, then your bank is probably easiest.

In the future, can you offer a 5% discount for advance payment?

accountingbod

I use a debt solicitors.
For a £5 charge they send out a legal letter threatening court action if the debt is not settled.
Before this point, i usually send out 3 chasing letters, the final one containing the threat of legal action.

Another way of collecting money is to pass debts to a factor company who will charge to collect the debts but will often advance say 80% of your receivables balance. I don't like this option myself as you lose direct contact with your customers and sometimes it gives a bad impression of your business but an option none-the-less.

Good idea on the 5% discount paddryg - i guess you will have to weigh up the cost of offering the discount against the cost of financing the extended payment terms but this could prove to be a good way to being cash in. Say a 5% discount if payment received within 14 days or something?

podperson

I would send them an official letter recorded delivery stating that if payment is not received within 2 weeks you will be commencing legal action. I actually used to work for a company who were dreadful with paying people and would generally only do a cheque when they received this kind of letter - phone calls and emails are were just fobbed off.

texranger

ajaim2011 wrote: »

Hi,

I'm trying to improve the cashflow in my company and I'm dealing with overdue invoices from months ago. Some of the amounts are fairly small but collectively they add up.

I have called and emailed a certain company and given them ultimatums - referring to legislation - all of which have been ignored. I wish to tell them that I shall pass their details on to credit reference agencies, but I'm not sure how to go about doing it. Is this something I can do? Is there a way to get them to pick up the phone? Answer an email?

As I understand their company is still a going concern, they're just being ignorant.

Regards.

you could send then a letter before action and if they are a business then you can claim Late Payment of Commercial Debts (interests) Act 1998 - The late payment interest rate is 8% plus the reference rate. The current reference rate for the period 1st July 2011 to 31st December 2011 is 0.5%.

kazzymac_2

After getting no repsonse to normal chase up letters, I used to send a 7 day letter 'notice before proceedings' letter by registered post and if no response then used www.moneyclaim.gov.uk to start legal proceedings. Just make sure that you have your back up documents to support your claim and also the correct address for the Company. As it does cost to start the claim I would add this cost to the outstanding account in the 7 day notice before proceedings letter and say that they could avoid this charge if they paid in full within 7 days. A lot of them would pay up upon receipt of the notice and I think I only ever used the claim system twice - hope that helps as I know how difficult it can be to make people pay up!!

Annisele

ajaim2011 wrote: »

I wish to tell them that I shall pass their details on to credit reference agencies, but I'm not sure how to go about doing it. Is this something I can do?

Nope, that isn't something you can do. (Some companies can, but if yours could you'd know about it - the ones that can are banks, credit card companies, that sort of firm).

Do you think this is a problem of can't pay, or won't pay?

If they won't pay, then ultimately all you can do is sue them - personally I'd be going down the letter before action route, then serving a claim form.

If they can't pay, then you need to decide how much time and money you're going to spend chasing them.

cavework

We now use a credit reference service .
It is expensive for a small business but as we are now getting a lot of new clients it works for us. and as we have been ' bitten ' in the past, we credit check every new customer
It also sends us an email alert when any of our clients credit score or situation changes and will submit a letter from a solicitor for late payment if required.
We have also used Money claims on line .. that usually works and the cost is paid by the debtor if it is paid before court action takes place, BUT .. be warned , you must be absolutely sure your claim is concrete

Equaliser123

steve1980 wrote: »

Send a letter giving 14 days to pay otherwise you'll be sending round the bailiffs.

How are you going to send round the bailiffs without a Court judgment?

cavework

Equaliser123 wrote: »

How are you going to send round the bailiffs without a Court judgment?[/QUOTE
If only this was possible a lot of small businesses would now be still trading :mad: