Due2pay’s blog

Medium to small businesses are at risk of being paid slowly by larger clients. Really bad late payment can even lead to insolvency in the worst cases. It has come to the point that after many years that the  chasing of late payment and managing debtors is a day-to-day task for many small businesses.

In an attempt to help businesses overcome the threat of late payment the Government introduced the Late Payment of Commercial Debts (Interest) Act 1998. This gives small firms with 50 or less employees a statutory right to interest for the late payment of commercial debts. This statutory right to interest and other new entitlements are available to all businesses and public sector bodies from 7 August 2002.

You can many things to avoid the dangers of late payment:-

1. The Late Payment of Commercial Debts (Interest) Act 1998 allows small businesses to claim interest on overdue payments from other companies. Originally drawn up to help small businesses claim against larger businesses, the law now extends this rule to claim debt recovery against other small businesses. Even if you did not state a payment period in the initial agreement with a client, the Act states that a payment becomes 'late' after 30 days. You are entitled to claim interest at 8% above the prevailing Bank of England base rate. It is worth quoting the Act on any invoices sent to clients.

2. Clearly many small businesses feel vulnerable in demanding payment from larger companies, this is very understandable. For this reason, it is essential to follow the initial steps mentioned above when doing business with clients. If late payment occurs, always try to politely obtain settlement for overdue invoices before taking further action.

3. If a client has not paid on time, it is essential to follow up on the invoice. Always try to obtain a point of contact in the accounts department since this will save time. Politely ask for the payment to be made and if the problem persists, you can consider charging interest on the overdue amount, or in the worst case, threaten the late payer with legal action with Business Debt Collection agencies

4. Clearly print your terms and conditions for payment on any contracts (or order confirmations) signed with an end-client. These terms should clearly state the payment period for any invoice - quite often you would expect payment within 30 days, but this could be shorter or longer depending on your type of business. Company Credit Checks are a way of checking your new customers and existing customers

5. You could offer an early payment discount, or a discount for upfront payment of several installments. For example, you could charge £500 + VAT for a service/product if the amount is settled within your agreed payment period, and £475 + VAT if payment is made within 10 days. This is likely to encourage many clients to pay early, although you will of course make less money on each deal.

There are many ways to use the internet to help combat late payment. One of the newest is a name and shame web site offering membership services.

Things just seem to be getting a little tough for Businesses at the moment. Major Banks are reporting a growing number of British firms have fallen behind with their repayments with debt recovery options expanding. This has led to larger companies getting more aggressive and

1) forcing extended credit terms on suppliers
2) demanding discounts on already agreed prices
3) demanding settlement discounts for just paying on time
4) Imposing retrospective rebates for goods already delivered.
5) Using late payment as an easy way of funding their own cash flows.

It is now more important than ever for small businesses to protect themselves and ensure invoices are paid on time.This will help them avoid potential cash flow problems, which, if not addressed quickly could result in the ultimate closure of their business.
These are extremely worrying developments for the whole business community. Companies should be looking at new business debt collection methods to survive whilst not ignoring a good company credit check.

A new internet based service to help victims of late payments has been launched by DUE2PAY LIMITED which has been specifically designed to help these companies recover their overdue invoices, without the need to go to court, also to share information on companies identified as late payers by fellow members, giving them the opportunity to make more informed decisions in dealing with a particular company.

The service is being offered free on a 60 day trial, after which, normal membership fees will apply. If you are interested please contact DUE2PAY.CO.UK

Tips for getting late payments paid earlier or on time

Don’t listen to the excuses
You already know most of them, “Can you resend the invoice”,  “it’s passed for payment” and  ‘the cheque is in the post’. Get invoices paid directly into your account. Your customer can not themn use the excuse that the cheque may be lost or that it is waiting for signature. You can also list a late payer on sites  which offer business debt collection services, websites which are cheap and cost effective.

Work  at it
Don’t think that businesses will pay you on time. You need to build relationships with people who hold the purse strings in companies which are slow in paying. Phone them, talk to them, smile on the phone to them, get them on your side. Be like a rat up a drain pipe and pester them in a nice way. Before you know it you will be the first to be paid.  A phone call in advance of the payment date confirming that you will receive payment puts your contact on the spot and he might not want to let you down. Paying direct into your bank is good, meet with your customers and press them into this

Ask for interest and ask for prompt payment
It is possible and legal  to ask for interest on late paid invoices.
Encourage prompt payment, if your pricing allows , hard in today’s climate, offer a prompt payment discount and link it in with Bacs electronic payment. You will see a positive cash flow with money going into your account quickly. Not waiting for money to clear means that you can use it immediately and don’t have to rely on costly loans.   

Do as you ask
Don’t get a bad reputation yourself as a bad payer news travels fast so pay your suppliers on time.  

Is a business a bad risk ?
Check them out through  debt recovery companies or associations they may be in, check out Companies House which can provide reports on line to you. Prevent risk by doing a credit risk check on all new potential customers.  risk by performing a credit check on all new customers.  Beware of companies which give may give referees which provide a big proportion of their supplies, ask what percentage they are responsible for. That supplier may be paid on time every month because not to do so could influence deliveries. Business debt collection is hard, one needs to be tough to make it work.

Internal Cost of Late Payment

Some companies are paying for dedicated staff to chase late payment others are not so fortunate. On average the internal cost for those not able to afford dedicated staff can be up to 20 lost working days per year.

More and more businesses are finding that they are spending more on debt recovery collection than ever before. Those companies which don't chase late payment find themselves getting deeper into debt and possibly closing when they failed to pick up on the fact that a customer was on it's last legsThe cost of funding staff to chase late payment is spiralling.

Is a business a bad risk ?
Beware of companies which give may give referees which provide a big proportion of their supplies, ask what percentage they are responsible for.Check them out through any associations they may be in, check out Companies House which can provide reports on line to you. Prevent risk by doing a credit check on all new potential customers.  risk by performing a credit check on all new customers.   That supplier may be paid on time every month because not to do so could influence deliveries.

Work  at it
Don’t think that businesses will pay you on time. You need to build relationships with people who hold the purse strings in companies which are slow in paying. Phone them, talk to them, smile on the phone to them, get them on your side. Be like a rat up a drain pipe and pester them in a nice way. Before you know it you will be the first to be paid.  A phone call in advance of the payment date confirming that you will receive payment puts your contact on the spot and he might not want to let you down. Paying direct into your bank is good, meet with your customers and press them into this.
Don’t listen to the excuses
You already know most of them, “Can you resend the invoice”,  “it’s passed for payment” and  ‘the cheque is in the post’. Get invoices paid directly into your account. Your customer can not themn use the excuse that the cheque may be lost or that it is waiting for signature.

Ask for interest and ask for prompt payment
It is possible and legal to ask for interest on late paid invoices.
Encourage prompt payment, if your pricing allows , hard in today’s climate, offer a prompt payment discount and link it in with Bacs electronic payment. Threaten to put the matter in the hands of professional debt collection agencies. You will see a positive cash flow with money going into your account quickly. Not waiting for money to clear means that you can use it immediately and don’t have to rely on costly loans.   
Do as you ask
Don’t get a bad reputation yourself as a bad payer news travels fast so pay your suppliers on time.   

It has long been said that UK companies have a reputation of being the worst of the European late payers. Legislation to reduce payment delays and add interest to overdue invoices has been in place for a long time with little sign that it is being adopted.
Where late payment is traditionally one sided in favour of the late payer, DUE2PAY redresses the balance by giving the late payer the opportunity to flag up a reason for late payment of a specific invoice or invoices. All members have sight of this information and all members can contact the late payer or other members. Court action or solicitor’s letters do not offer this service. Debt recovery has now been taken to a new level with DUE2PAY.
Industry late payment figures have shocked industry observers who fear that late payment is likely to get worse with the rise in interest rates and the economy taking a downturn, factors that make retaining cash for as long as possible even more attractive. This level of late payment comes despite legislation phased in since 1998 that was designed to encourage better payment practice by allowing firms to claim interest on Invoices that were not paid on time.
A major factor for UK companies taking longer to pay invoices was the increase in interest rates. In times of high interest rates it was natural to look on suppliers as a cheap form of loan. Extending payment for 1 month means that you do not have to borrow and pay interest to a bank to fund that loan for 1 month. With banks tightening their belts it is harder to get loans and coupled with a reduction in interest rates the delaying of payment still continues as a method of managing cash flow.
With DUE2PAY a company can list a late payer and other members have sight of this information. Find more out here.
The UK culture of late payment damages business, employment and international trade.The two main factors agreed by many to be the greatest challenge to business growth is restricted financial lending and late payment. The two go hand in hand. Banks will not lend money so where else can a business be funded ? For many it is the unfortunate supplier and it is the less vigilant or commercially aware supplier which suffers.
This is the point at which companies have to be aware of the other tools available to them. For new accounts a company credit check is essential, whilst these are historical they provide useful information. The use of other methods such as due2pay.co.uk , business debt collection and solicitor’s letters may seem extreme but are essential in this day and age. DUE2PAY’s approach to late payment takes the company credit check to a much needed area. Companies have been wanting a central register of late payers for a long time.

DUE2PAY is a web site aimed at bringing common sense back to the problem of late invoice payments, by tackling debt recovery in a new way. Late invoice payment is now regarded as an acceptable practice for late payers and an addition to business debt collection . In some cases the practice is an effort save a business from closing, for other companies the philosophy is to dot it as and acceptable to fund an already profitable business. Consider www.due2pay.co.uk as an early warning system, an alarm which if triggered can save you a lot of money for a fraction of the cost of the interest you are paying in funding your customers' businesses. Or a fraction of the cost of phone calls to chase payment and of solicitor's letters.
The Forum of Private Business in the UK says that late payments of invoices are having a serious impact on 70% of firms, with nearly 60% reporting that the situation had worsened over the past year. It is apparent that this scenario of late payment is being used as a form of free credit for businesses. Delaying payment to many customers funds a business and reduces bank borrowings. Any surplus cash held by a customer will in turn earn interest. Depending on the size of firm, late payments can have a major impact with a third of firms losing between £1,000 and £5,000 a year as a result and 15% losing between £5,000 and £50,000. On a daily basis we are hearing of companies forcing firms to accept mandatory discounts, longer payment times, and payment delays.
You can use www.due2pay.co.uk along side a company credit check. In fact it can work well alongside other traditional methods such as business debt collection and company recovery of debts through outside agencies which take a more hands on approach. UK government introduced the right to charge interest on late payments but this rarely happens in practice. www.due2pay.co.uk has two interesting powerful strings to its bow.
1) Where the website sends an email and fax to a customer asking them to pay an invoice within 14 days. If it remains unpaid, then the supplier is revealed on the site as a late payer. A nice addition which shows it is not all one sided is that the late payer is given the opportunity to 'dispute an invoice' and potential suppliers can enter into discussions with them and also the aggrieved supplier.
2) The 'Watch List'. Put a company on your Watch List and when it is listed as a late payer you will be informed by email.Large companies are using various methods to keep more money in their accounts. For example increasing the time it takes to settle suppliers' bills from 30 days to 75 days and imposing a 2.5% ' settlement' charge on payments. Cutting payments to suppliers by two per cent, despite one company almost doubling its annual profits.
The FPB says that it wants to see the Government 'leading by example' by committing to paying its suppliers on time, as well as introducing a code of conduct for itself and big companies. Chief Executive of the FPB, Phil Orford, said: 'Protecting cash flow, which is the lifeblood of any small business, has become even more important because of the credit crunch. We would like to see non-statutory measures implemented to enable businesses to hold late-payers to account without fear of losing customers and contracts.' Join www.due2pay.co.uk now and take advantage of the free trial

One main factor s that businesses in the UK have taken to increase their payment times was the increase in interest rates. During periods of  high interest rates businesses naturally resorted to using their  suppliers as a bank able to give low interest loans but in their case, it is interest free.  When a company extends paying an invoice by 1 month, that business will not have to fund the equivalent amount with their bank, it also means that they do not have to approach the bank for a loan for that amount.   We now know that banks are more reluctant than ever to advance loans. Even today even considering the reduced  interest rates the delay of paying continues as a way of managing cash flow.Never before has the need for businesses to pull together been as important as now. For many a day UK companies have been regarded as ruthless and with a reputation as  being the latest of the late with regard to being  late payers.  The government has put in place legislation over the years to stop  payment delays and with the extra bonus of adding  interest to overdue invoices. There has been no indication that take up has been popular

All businesses which supply others have to be aware of tools which can help them be more successful. When considering new business, a company credit check is usually the first port of call, although giving historical information they are extremely good to use.  Other methods which are available  such as http://www.due2pay.co.uk/ , business debt collection and solicitor’s letters may be thought to be aggressive but can be essential today. DUE2PAY has a novel way which to tackle late payment  taking  the company credit check  to a new level. Companies have been wanting a central register of late payers for a long time. These businesses can now list a late paying company and  other members have sight of this information, simple.
Late payment has traditionally been very one sided in favour of the late payer, DUE2PAY addresses this in giving the late payer the chance to flag up a reason for his late payment of a specific invoice or invoices. Every member of DUE2PAY can access  this information and all members can contact the late payer or other members. Court action or solicitor’s letters do not offer this service. Debt recovery now has a meaningful alternative with DUE2PAY.
Industry late payment figures have surprised  observers of industry trends, they fear that the uncertainty in the economy will make things worse for those who supply the late payers. The downturn in the economy, the heavy discounting by retailers is getting worse and with the global economic conditions and anything that a company can do to retain  cash for as long as possible will be even more attractive. This trend to  late payment is in spite of the legislation  phased in since 1998 which was designed to develop a better payment practice by letting  businesses ask for or  claim interest on Invoices that have not been paid on time.
The UK dependency on late payment is detrimental to business, jobs  and also global trading. It is thought that one of the biggest challenges to increasing the growth of business is late payment and lack of bank loans. They go hand in hand. If a bank is not lending to businesses, the supplier will be put under pressure and will suffer.

The commercial world is tightening its belt. Major Banks are reporting a growing number of British firms have fallen behind with their repayments. Business debt collection is more important than ever to prevent cash flow issues. This has led to larger companies getting more aggressive and

1) forcing extended credit terms on suppliers
2) demanding discounts on already agreed prices
3) demanding settlement discounts for just paying on time
4) Imposing retrospective rebates for goods already delivered.
5) Using late payment as an easy way of funding their own cash flows.

These are extremely worrying developments for the whole business community.

It is now more important than ever for small businesses to protect themselves and ensure invoices are paid on time ensuring a company credit check is carried out.This will help them avoid potential cash flow problems, which, if not addressed quickly could result in the ultimate closure of their business.
An internet based service to help victims of late payments called DUE2PAY LIMITED has been specifically designed to help these companies recover their overdue invoices, without the need to go to court or traditional debt recovery methods. It acts to share information on companies identified as late payers by fellow members, giving them the opportunity to make more informed decisions in dealing with a particular company.

The service is offered free on a 60 day trial, after which, normal membership fees will apply. If you are interested please contact DUE2PAY.CO.UK

All UK Limited companies can join www.due2pay.co.uk to stay one step ahead in the invoice payment stakes.

The closure of firms in the retail sector is making things tougher for all suppliers. What happens at corporate level impacts on the consumer. The employees of Woolworths, MFI and other retailers will be tightening their belts and will not have the disposable income to spend as in previous years. The knock on effect is not only within the retail market but also the supply industry to those firms. These will involve contracts for cleaning, security and shop fitting. All will feel the pinch more in a declining market. Costs and overheads will be looked at more closely, credit will be pushed to the limit and companies may ask for extended credit or take it without asking. Companies which are less financially aware will not realise that giving an extra month credit is the same as giving an interest free bank loan. Imagine going to your bank and ask for £10,000 on a 0% free loan for 1 month.

This is where debt recovery along with business debt collection comes in to play.
Longevity in the retail trade is no guarantee for continued survival, Woolworths has been around for almost 100 years. The winter of 2009 is being described as a High Street Bloodbath triggered in part by the biggest decline in consumer spending for 13 years.

All UK Limited companies can join www.due2pay.co.uk to stay one step ahead in the invoice payment stakes. To describe DUE2PAY in a few words is hard as the service provided is unique. It is a members club which allows members to find out who is paying late in GREAT BRITAIN Limited. Company credit checks are important for deciding on doing business with a new customer. DUE2PAY goes a few steps further by making information on late payers available, something which has not been done to this extent before.
The Watch List feature at DUE2PAY is available to all members. Any member can create a list of companies which they want to keep an eye on. When a watched company is listed on DUE2PAY the member is sent an email advising them of this. The member can log onto the site and immediately contact the supplier which made the listing. Consider it to be a UK wide breakfast club. The members details are confidential on the site but are encouraged to exchange contact details.

........describe DUE2PAY as a must have business membership