How To Stop Late Payment Of Commercial Debts
It is unfortunate that Bristol businesses suffer from the late payment of commercial debts on a yearly basis.
Whilst late payments are normal in daily business life, these must be stopped in order to protect cash flow.
Cash flow is the lifeblood of any sized business and if this is not stable, it can threaten its longevity.
It is grossly unfair to the supplier of goods and services to not be paid for what they have provided.
If clients start to leave payments overdue or completely refuse to pay in general, you need to take necessary action.
There are measures that can be implemented to prevent the impact late payment of commercial debts can have on your organisation.
Monitor The Credit Rating Of Your Clients
It is a common procedure in any business credit control team to carry out credit checks on any new clients.
Credit ratings will give you an indication of whether or not the client is likely to pay you in a timely manner.
For example, if the credit report is green, this means they have a positive financial history.
Taking the time to perform this task will help to eradicate any late payments towards the original creditor.
Payment Terms
In addition to credit checking your client, payment terms can be implemented to a business transaction process.
Payment Terms document any costs, payment dates, terms and conditions of the work and are outlined at project start.
The payment date is usually 30, 60 or 90 days after the invoice has been issued. The length of time is usually based on the strength of the relationship with the client.
Both the business and the client are to sign this document, meaning the client cannot easily get away with not paying.
Late Payment Of Commercial Debts – Bristol
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Late Payment of Commercial Debts (Interest) Act 1998
The Late Payment of Commercial Debts (Interest) Act 1998 declares that businesses can claim interest on any overdue payments. This act extends to England, Scotland and Northern Ireland.
It is common for debtors to pay quickly if they are threatened with being charged a greater amount than what is already owed.
The statutory interest rate that can be charged on any late payments is the Bank of England base rate plus 8%.
A majority of businesses use this method as a way to stop late payments from occurring.
Whilst adding interest to any unpaid fees may seem like a positive idea, it may not always guarantee a successful result.
Some debtors may simply refuse to pay what is owed, regardless of any legal proceedings that may be threatened.
When money is owed by businesses and public authority figures cannot help, we recommend using a debt recovery service.
Debt Collection Agency For Small Businesses
Small business owners may need a professional solution instead of wasting internal resources to undertake the collection process.
The most affordable and effective way to recover late payments is by using professional debt collection services.
At Debt Collection Bristol, we provide our clients with the easiest way to find the best agencies.
Since 2006, we have created a list of recommended agencies for Commercial and Private debt requirements.
The service we deliver is focused on providing our clients with peace of mind in what is already a stressful situation.
Our recommendation for the recovery of business debts is Federal Management.
They are the UK’s leading commercial debt collection agency and have operated since 2004.
The success rates that they deliver are the highest in the industry with an average of 90% on undisputed debts.
They are authorised and regulated by the Financial Conduct Authority (FCA) to recover debts under the Consumer Credit Act.
Late Payment Of Commercial Debts – Bristol
Get In Contact With Our Experts Now!
Our recommended team of Debt Recovery Experts are happy to help with your enquiries.
Late Payment Of Commercial Debts – What Makes A Bad Debt Collection Agency?
Sadly, there are agencies that may only want to make money, rather than help their clients.
Below are a few things to watch out for when it comes to using debt collectors for late payment of commercial debts in Bristol.
- A history of poor reviews or no reviews at all from their clients
- A service that is designed to drip fees along the way, resulting in a large cost.
- Extremely high commission rates, with little demonstration of high recovery rates.
- A lack of accreditations.
- Abortive fees (being charged even if the collection of money is unsuccessful).
Choosing our partners will negate the need to watch out for the cowboys of the industry.