Late payment can cause significant financial strain on small businesses and ltd company accounts, impeding their growth and ability to pay suppliers. The UK’s late payment crisis is predicted to worsen in 2022, potentially leading to the closure of 440,000 SMEs.
To protect against late payments, small businesses should consider granting credit cautiously, credit check new customers, set credit limits, and agree to staged payments or part payment upfront for high-value sales. Legally, businesses can charge interest on overdue invoices, but a new invoice detailing the accused’s interest needs to be sent.
Preventing Late Payment
To prevent late payment, small businesses should send invoices promptly with all necessary details, use invoicing/credit control software to send automatic notifications, and offer cost-effective incentives for early payment.
Maintaining solid client relationships can also help prevent late payments, but it’s important to remember to show flexibility and understanding while ensuring that customers adhere to payment terms. Invoice finance can give a cash flow solution if delayed payment is problematic, with options such as invoice discounting or factoring.
Debt Recovery
In addition to interest charges, businesses can charge a fixed sum to recover a late payment. The amount charged depends on the value of the debt, with charges ranging from £40 to £100. Reasonable costs for debt recovery can also be claimed.
Local tax accounts provide a fast way to fulfill and file your Self-Assessment tax return. It’s user-friendly and comes with helpful hints and tips. You can also store your receipts for allowable expenses and receive support from an experienced team.
