Late payments can affect more than your cash-flow

20 Apr 2018

It follows that late payments will impact on company cash flow, but the personal cost for small business owners is discussed much less, if at all.

Research recently commissioned by the Prompt Payment Directory has identified the personal cost of late payments for SME owners. More than a third (36%) of the SME owners surveyed had forgone their own remuneration as a direct result of late payments, with 21% experiencing difficulties in paying their mortgages or rent. Some SME owners reported having to sell their homes or use their savings in order to “plug the gap” caused by late payments.

As well as the financial impact of late payments, 29% of respondents to the survey also reported suffering stress, depression and other mental health issues as a result of late payment. 

There are steps that can be taken to minimise the risk and/or impact of late payment, such as asking for payment in advance of delivering goods or services, assessing the credit worthiness of new and existing customers, and not extending credit to customers who are perceived to be a high risk.

Engaging a law firm at an early stage to chase late payments can have a very real impact on the speed of payment and does not have to be an expensive exercise. In the experience of our specialist Debt Recovery team, receiving a letter demanding payment from a reputable law firm will often result in an unpaid invoice being pushed to the front of the queue, which will be good news for SMEs and SME owners alike.

Further reading

Use of statutory demand to make company insolvent suspended until June

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Cheraine Williams looks at more temporary Covid-driven measures that will protect businesses and tenants from possible legal action
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New guidance issued for valuation of flats and investigating fire safety

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Cheraine Williams looks a the current situation facing leaseholders looking to sell or re-finance their property; will new guidance provide clarity?
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Government sets new energy targets for domestic and commercial buildings

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UK law requires net zero greenhouse gas emissions by 2050; new rules and standards for heating and powering buildings will have a significant impact
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Covid regs prevent landlords taking action to recover rent for more than 500 days

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Just seven days’ rent arrears used to be enough for commercial landlords to take action; the latest adjustment pushes that out to 554 days
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