Small Business Debt Collection has never been more important as the UK economy continues to recover from the pandemic. Regardless of the damage covid has caused, the problem of small businesses not getting paid is nothing new.
The past couple of years has seen the pandemic fuel a worsening problem for Small Business invoices not being paid on time.
Small Business Debt Collection is growing across the UK. The UK has a chequered history when it comes to late payments and the pandemic has inflated that. Small Business insolvencies are on the rise. Given the increasing rate of Business failure, Small Business debt collection services are being called upon to help turn the tide.
In the modern day consumer society, the person owing the money is often portrayed as a victim. That maybe be suitable when the creditor is a greedy high interest charging finance company but certainly not when it is a small business simply trying to make ends meet.
For any Small Business, chasing unpaid invoices is counter productive. It can be a fruitless exercise that induces great stress and frustration. Not to mention to endless hours chasing false promises of payment and disrespectful deceit. There is now also the issue of compliance when contacting customers to request payment.
“Prevention is better than a cure”
Any Small Business should take adequate steps to prevent debt in the first place. Many Small Businesses work on a pro-forma invoice basis where goods or services are paid for upon delivery.
Basic credit checking and due diligence can prevent small business debts from occurring. When giving credit, every preventative measure should be taken to avoid the risk of not having your invoice paid.
The same logic should also apply to sole traders and freelancers who are also suffering from non-payment.
Any Small Business Owner should have a contingency plan for when invoices are not paid. Working with a Professional Small Business Debt Collection Agency can minimise the financial disruption unpaid invoices can cause.
Our associates at Federal Management have kindly provided us with some pointers to relay to any Small Business owner facing unpaid invoices. Federal Management are the famous name in the UK for Small Business Debt Collection as well as representing some of the country’s most famous names.
This non exhaustive top 5 basic tips can help keep your small business cashflow maximised.
- Confirm all orders in writing – Upon receipt of an order, you should confirm this via email or letter. Confirmation of the order placed should contain the agreed costs, payment dates and details of the goods or services supplied.
- Clear and concise invoicing – Detail in-depth any goods or services that are due to be supplied. All particulars of the service supplied should be detailed to avoid ambiguity. Agreed payment dates is essential.
- Monthly Statements -These can be an important tool for long term or repeat customers. They will ensure they are aware of expected payment dates.
- Reminders and warnings – If payment dates are missed, never be afraid to ask to be paid. You should expect to be paid on time. If accounting software is being used, reminders can be automated. If accounting software payment reminders are ignored then a notice of possible ‘further action’ needs to be communicated.
- Take positive action – No Small Business can survive with non paying customers. Never be afraid to take a Professional and direct action. Some Small Businesses are often hesitant to take action in fear of alienating the customer. The fact is that if they had paid on time then it would not be necessary. Any fear of that can be mitigated by ensuring you work with a professional company.
Leading UK Debt Collection Agencies
The stand out name for UK Commercial Debt Collection (also known as B2B Debt Collection) is Federal Management. For nearly 20 years they have served British Businesses with their low fixed cost Debt Collection services. They are to go to people for Business Debt Collection and are a multi award winning service that is approved by the FCA.
For consumer or personal Debt Collection, the famous name is Frontline Collections. Again, a long standing company with a fantastic reputation for delivering a decent, professional debt collection service. They are the only gold approved supplier for the Independent Schools Association such is their high levels of professionalism and are regularly touted as the UK’s best debt collection agency.
Late payment is the single biggest Small Business killer
Last month the Federation of Small Businesses cited Late Payment as the biggest single reason why so many small businesses fail. 58% of UK Businesses are currently suffering from unpaid invoices of some type, costing the economy hundreds of millions of pounds.
Barclays’ head of business banking Hannah Bernard said: “Late payments is the single biggest cause of business failure.
“We want to unite the small business community in tackling this issue and raise the social conscience of larger businesses who don’t pay on time.”
“Having a constant cycle of late payments will hamper the future growth of the economy, and fuel a never-ending cycle of uncertainty for hard-working entrepreneurs.”
If your Small Business is owed money then taking action today maybe the best thing you have ever done.