Fed up of late payment? There is another way!

When large organisations pay late, it can put small firms out of business. It’s that simple.

FSB’s own research shows 60% of small firms experience problems with late payments, and the pandemic has made matters much worse. And while I don’t want to be the harbinger of doom, the looming recession will likely see this type of bad practice only escalate.

While this is the kind of behaviour we have come to expect from some of the biggest businesses out there; I’m talking supermarkets, big construction and food manufacturing off the top of my head, you’d be amazed to discover even the public sector – the supposed bastions of prompt payment – do themselves resort to questionable payment practices, such as invoice settlement discounting. I can tell you (although I’m not yet naming names) there are five councils in Greater Manchester alone who use invoice settlement with their suppliers. ?

Invoice settlement is paying a supplier faster than agreed in the payment terms, in return for a small percentage off the total amount. That’s a low blow in my book, particularly as in the past we’ve looked to the public sector as leading lights of good payment practice, and what kind of message does it send out to the bigger businesses? Measures like this would surely fall foul of the core principles of GM’s Good Employment Charter if this were an employer/employee situation, which is all about employers being more ethical and not ‘stiffing’ the people work for them. As far as I know, all councils in GM are signed up to this code.

I do wonder what Andy Burnham thinks about this? But I digress.

Late payment is a slightly different subject, and it’s what I want to focus on in this piece as it’s a fact of life for all too many – as 60% of small firms (and growing) will attest to.

Legislation states the period for payment in a business-to-business (B2B) contract should never exceed 60 calendar days, unless expressly agreed by both parties, and provided that it is not grossly unfair to the creditor. For the public sector it’s 30 days. So, while 60’s the absolute max, many smaller firms will demand anything from seven days – and so they should! Just imagine walking out of Tesco with a trolley full of shopping and telling them you’ll pay next month (imagine how that conversation would go), but then not.

Cash flow is so important for any business, but as the headwinds of recession start to pick up, on the back of rising prices and other inflationary pressures biting hard, business owners will need to be all over their credit control process like a rash. If you’re expecting an invoice to be paid on X, in order to pay your supplier by Y – you need to know it’s landing on the agreed date – if not sooner. But how can you increase the chances of this?

Small business owners have to be pretty good at everything if they want to make a success of it, but credit control can be time consuming, and time is money when there’s a dozen other jobs to be ticked of the growing daily checklist. You just need your clients to pay up on time, right?

That’s why we’re putting on an event on November 30 which will explore exactly how to get this to happen. How To Get Paid In Full, On Time, Every time is a 75minute, virtual lunchtime session packed with tips and tricks and clever ways to make it happen.

If you want to learn how to sharpen up your payment processes and get paid faster, with less effort, this one’s for you. Attendees will discover there’s an easier way to get customers to cough up, in full, on time, and sometimes even ahead of schedule just by implementing some simple but essential credit control processes and procedures anyone can do. Specifically:

• Discover why carrot v. stick = more fruit
• Have a better understanding of the payment process journey
• Learn some canny tricks that’ll have your customers clamouring to cough up
• Know what you can and can’t do when it comes to getting paid – and learn other important legal knowledge
• Leave armed with a resource of new information helping to reduce payment times
• Grab a free ‘getting paid checklist’ with 43 ideas to help you collect every penny you’re owed

If that’s pricked your interest you can see more in the link below. It’s free, and will be delivered by Chris Booth of McKellens Masterclasses fame. ?https://www.fsb.org.uk/event-calendar/how-to-get-paid-in-full-on-time-every-time-30nov.html

Incidentally, while I’ve got your attention, FSB has been asked to feed in to a study by the GMCA in to small business attitudes to public sector procurement – delivering work for local authorities. The irony, hey. We’ve pulled together a short survey which will help us evidence the views of small firms like yours. It’s short and sweet and all firms can complete the survey. You can find it in this link: https://www.smartsurvey.co.uk/s/W6OQFY/