Cash flow is the lifeblood of any business. That’s why it’s absolutely crucial to collect debts due from customers for goods or services sold on credit. Indeed it has been estimated that late payment is a major factor in at least 1 in 5 business failures.
No matter how fantastic the product or service, no matter how great the business model, a business which doesn’t get paid for what it sells will never succeed.
Research conducted by the BACS electronic payments organisation last year found that an astonishing 76% of businesses are affected by late payment, some of up to 6 months beyond contractual terms. In those companies that suffered from late payment:
• 20% of directors were forced to take a pay cut
• 26% had to increase their use of bank overdrafts just
• 23% had no choice but to pay their own suppliers late, jeopardising continued supply
I recently attended a seminar conducted by our friends at Acquit Debt Recovery (www.acquit.org.uk). According to managing director, Diane Bantten, the most common excuses for non-payment that she hears are:
1. I can’t afford to pay (until my customer pays me)
2. The cheque’s in the post
3. I’m not paying because I have a dispute
4. I haven’t received the invoice
5. There’s no purchase order number on the invoice
6. There’s no-one here to sign the cheque
7. The director has died
8. We can’t pay you until we get paid
9. We’re changing banks
10. We’ve ceased trading/gone into administration/liquidation
Most of these seem to me to be pretty unimaginative, not say lame, excuses. A bottle of fizz to the reader who sends in the best or most outrageous excuse they’ve heard (in the opinion of our expert and completely impartial judge). The closing date is 28 June 2016.
Meanwhile, please don’t let late payers jeopardise the success of your business.