Preventing Late Payment Of Commercial Debts

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Preventing Late Payment Of Commercial Debts

In Manchester, there are well over 124,000 businesses of all sizes spread across every industry sector.

A large percentage of these businesses will experience the late payment of invoices at one point or another.

Whilst it is common for invoices payment dates to go overdue in everyday business life, this issue needs to be prevented.

Invoices go unpaid due to legitimate reasons, such as forgetting to pay, but some clients may simply refuse to pay.

It is grossly unfair to the supplier of goods and services to have a client that ignores payment practices.

When payment terms are ignored, you need to take action to deter late payments from occurring.

There are precautions that can be put in place to prevent the late payment of commercial debts.

We have put together this guide to help business owners suffering from unpaid business debts.

Tips For Preventing Late Payment Of Commercial Debts

The late payment of commercial debts can have negative effects on your business’s cash flow.

Cash flow is the lifeblood of any organisation and needs to be kept in a stable position.

There are many ways to negate the impact that an unpaid invoice can have on your business.

Agree On Payment Terms Prior To Work Commencing

A regular procedure in day-to-day business transactions is the use of Payment Terms, which are set out at the beginning of any work.

Payment Terms document how much is owed, on what date this is to be paid and any other terms and conditions related to this.

The payment due date is usually 30 days, 60 days or 90 days after the invoice has been issued.

The document should be signed by both parties (you and your client) so they are aware of their obligations.

A signed contract will prevent your client from being able to leave invoices unpaid easily.

Keep An Eye On The Client’s Credit Rating

Monitoring the credit rating of a new or existing client is a positive step to preventing late payments.

For accounts teams, this is a common practice as it determines whether or not the company is likely to pay. This is indicated by the use of green, amber and red colours.

If a credit check result is green, this means the client has a positive financial history of paying on time.

Claim Interest On Overdue Payments

The Late Payment of Commercial Debts (Interest) Act 1998 states that interest can be claimed on overdue payments. This extends to England, Scotland and Northern Ireland.

The statutory rate of interest that can be charged on late payments is the Bank of England base rate fixed sum plus 8%.

Claiming interest and compensation on late payments is a beneficial way to get the client to pay what is owed.

The threat of having to pay more than what was already owed is the reasoning for this.

Sadly, some debtors may stop at nothing to avoid paying any commercial debts that are owed.

If this happens, you need to instruct the services of a professional debt collection agency.

Debt Collection Agency For Late Payment Of Commercial Debts

When money is owed by businesses and public authority figures cannot help, stronger methods need to be used.

At Debt Collection Manchester, we provide the easiest way for our clients to recover late payments.

We have collected a list of the best debt collection agencies in the city and surrounding areas.

This is only applying to agencies that are experts in Commercial, Private and International recovery.

Our recommended commercial debt collection agency is Federal Management, which has operated since 2004.

They are regulated and authorised by the Financial Conduct Authority (FCA) to recover debts under the consumer credit act.

For late payments of private debts, our recommended partner is Frontline Collections.

They are the UK’s leading private debt collection agency and recover millions of pounds worth of debts yearly.