Late payments costing small businesses £25,000
Business owners in Northern Ireland and the rest of the UK are owed £24,841 in late payments on any given day, according to a recent study of two million invoices undertaken by accounting firm Xero.
Xero’s research points to what it calls “supply chain bullies”, a term for larger business enterprises who effectively treat smaller business as a line of credit. With the current uncertainty around the economy, and margins growing ever tighter, that such a substantial amount of invoices remain unpaid heaps even more pressure on small business owners.
The Business Advice website outlines that “Late payments worth almost £25,000 equate to 11 months’ average staff wage, 37 months of mortgage payments or nine family holidays.” It also states that around 50,000 small business collapse every year to due cash flow problems such as these.
With small business owners essentially operating on a knife edge in terms of profit margins, they simply can’t afford to have any money not arrive on time, never mind £25,000.
While actual legislation to deal with the crisis of late payments has not been forthcoming, small business in Northern Ireland and the rest of the UK have been encouraged to tackle late invoice payments on their own terms. These recommendations include agreeing defined payment terms with all new customers, ensuring that invoices are sent well in advance of the payment due date, and implementing an internal debt recovery procedure, with a monitoring system to keep track of when payments are due to avoid devoting resources to chasing them after the fact.
In lieu of legislation, small businesses struggling with recovering their debts can enlist the help of a third party debt recovery service. A business can claim compensation for debt recovery costs, and the customer should be made aware of this, and the business is also entitled to interest on the late payment as well.
If you are a small business owner in Northern Ireland experiencing late payment or non-payment of invoices from customers, contact one of the debt recovery solicitors at Wilson Nesbitt in Belfast by clicking here to find out about our debt recovery service.