75% of small businesses are afraid to chase late payments
Despite late payments and bad debt having a significant impact on SME’s, new research has shown that three quarters of them are afraid to chase unpaying customers.
The survey, conducted by small business commissioner Paul Uppal and business lender Growth Street, also found that 76% of SME’s are worried that taking action against late payment may result in their invoices not being paid at all.
Of the 500 business contacted, the majority had payment terms of up to 30 days, with only 14% saying they had agreed to terms of more than 61 days with their suppliers.
Small businesses can often find themselves under great financial stress and may rely on invoices being paid to cover their daily running costs. Delayed payments and non-payment of invoices can have a serious impact on their cash flow.
Paul Uppal says: “Through my role, I am committed to keep the spotlight on this issue and instil confidence in the minds of small businesses. I will continue to tackle late payment and address the imbalance in market power between parties, promote transparency and encourage better payment practices through culture change.”
What can you do?
If you feel that you can relate to these statistics when it comes to chasing late payments, there are steps you can take to make sure that you maintain your client relationships while still pushing to get paid on time.
Being able to reach out in a polite and professional way, as well as being prepared to calmly handle and resolve any excuses your client may give you, are key to successfully collecting unpaid invoices.
Take a look at our blog, How to politely chase late paying customers, to get some great tips and put together a plan of action for tackling late paying clients.
There may also be instances when one of your high value customers isn’t paying. There are still actions you can take to recover your outstanding balance without damaging that relationship, however it’s also important to ask yourself whether it could be better in the long term to move away from a client who regularly misses payments.
As chief executive of Growth Street Greg Carter says: “Every business should have the right to know when and if they will be paid.”
If you’re struggling with clients who aren’t paying on time or simply lack the time to keep on top of customers, give us a call on 0800 9774848 to see how we can help your business with credit control and debt recovery.