Problems of late payments.
Late payment of bills is a major problem for companies across the North-East and the UK as a whole.
It's a situation that can lead to serious cash flow problems for suppliers, which can reduce profits and threaten commercial survival.
An estimated pounds 7m is owed to small businesses because of late payment of bills at any one time and around 10,000 UK businesses fail each year as a consequence of late payment.
And a survey revealed that 32pc of reasons given for not paying in time were excuses made to disguise intentional late payment.
Some of the most bizarre excuses included:
* I cannot make a payment until the planets are aligned, which is only twice a year.
* The owner's been buried with his cheque book.
New Government legislation, which came into force last year, gives businesses a statutory right to claim interest and up to pounds 100 in debt recovery costs from others who pay their bills late, including overseas customers.
The Late Payment of Commercial Debts (Interest) Act 1998 is designed as a deterrent and the right to charge for the wasted efforts spent chasing unpaid bills should make slack payers think twice before trying to stall for time.
The right to claim interest from late payers is not compulsory - it is up to the supplier to decide whether or not to make a claim, but all companies should consider the new legislation and ensure their credit control procedures are reviewed to take it into account. Companies are also advised to inform and remind customers that interest will be charged on overdue invoices under the act, both verbally and in written communications such as credit application forms, order confirmations, invoices and all contracts.
Companies need not fear antagonising customers. The legislation is a statutory right but does not seek to encourage claims - its primary aim is to deter companies from paying their bills late.
Treat it as an integral part of your payment terms and customers will soon accept it as part of the way you like to do business.
The DTI's Small Business Service has published a special guide - The Late Payment of Commercial Debts (Interest) Act 1998: A User's Guide - which is available by telephoning (0870) 150-2500 or it can be downloaded from the Better Payment Practice Group website at www.payontime.co.uk or http://www.dti.gov.uk/latepay/latepaymentguide.pdf
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|Publication:||The Journal (Newcastle, England)|
|Date:||May 2, 2003|
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