Ashley wrestles with late payments

  • Anil Kanda
  • 22 Dec, 2006

Late payment of invoices is a big problem for many businesses with nearly 50 per cent of the invoices issued by small businesses being paid late. This problem is having a devastating effect on many companies’ cash flow – the DTI estimates that at least 10,000 businesses fail each year as a result. Small business invoice finance specialists, Ashley Commercial Finance, has produced a guide to help speed up payments for small business.

“At any one time, £20 billion is owed to UK businesses,” says Richard Wilson, head of business policy at the Institute of Directors and chairman of the Better Payment Practice Group (BPPG). On average, invoices are paid 19 days late. The legal position is unequivocal. If you have agreed clear payment terms with a customer who fails to pay on time, it is a breach of contract. However many firms don’t tackle the issue up front and many don’t have ‘cast iron’ contracts.

Jayne Merriman, Operations Director at Ashley Commercial Finance agrees;

“This money from overdue payments should be sitting in the suppliers’ bank accounts. We have many clients who use our services purely because they don’t want the hassle and don’t have the time to chase overdue debts. It is interesting to note that we are seeing more and more enquiries from this type of company. The important factor that companies looking for this service must consider when selecting their invoice finance provider is that every invoice needs chasing, not just the handful of large customers. Ashley chases EVERY invoice it deals with for a client. Invoice finance is fast becoming the smart way to finance a business and is often a much better option than an overdraft.”

Conscious of the need for companies to be paid on time, Ashley Commercial Finance has produced a guide to help speed up payments for small business. A few ‘gems’ are given below:

  • Credit check all new customers as a matter of routine.
  • Tackle payment issues up front with a ‘cast iron’ contract.
  • Add in to all your contracts your rights under The Late Payment of Commercial Debts (Interest) Act 1998.
  • Separate the ’can’t pay’ from the ’won’t pay’ customer.
  • Keep the lines of communication open.
  • Charging interest on overdue payments as a last resort.

The six page guide is available by contacting Ashley