With the busy end of the financial year behind us and warmer weather finally here, many business owners are excited to spend their annual leave enjoying some well-deserved time in the sun right now. But chances are you’re not the only one thinking of activating your ‘out of office’ sometime soon…
Foreign travel is back to pre-pandemic levels. So, there’ll be plenty of employees jetting off in June before prices rise or booking a week or two off work when the kids are off school in June and August.
‘What’s the problem with that?’ you may ask. One: it only takes a few absent team members from your company and your clients’ organisations for invoices to be missed — and late payments to stack up. Two: with inflation still wreaking havoc on businesses’ bottom lines, now isn’t the time to amass debts.
Thankfully, we know all about how to get paid on time in the summer months, as well as what to do if you’re owed money during this tricky time. So, just sit back, relax and let us explain what to do to protect your cash flow this summer.
Plan ahead
Ensuring everyone knows who will be going on holiday and when is the first step to ensuring you still get paid on time. Just arrange for someone to cover the staff member responsible for collecting payments whilst they’re away, so nothing falls between the cracks. You can also ask your clients if they’ve got any trips planned and check that they’ve got someone to pay the invoice when they go.
Maintain contact
If clients don’t make the necessary payments before going away or leave without informing you, don’t just sit and wait until they return. Get a staff member to let them know they owe you money via email (they might still be logged in) or by phone — so long as you don’t annoy them and risk damaging your relationship. There’s a fine line between polite reminders and pestering!
Mention late payment charges
Once an invoice is overdue, you can charge late payment interest at 8% above the bank base rate. This charge is applied to the gross amount of money overdue, including VAT (work out how much this is for your payment using our calculator). Make sure clients know this to encourage them to cough up sooner rather than later — and prevent repeat offences down the line!
Suggest mobile banking
Whilst you can expect to hear ‘The person who signs checks is away’ or ‘I don’t have access to a computer’ in summer, you should stress that clients can use mobile banking to pay you wherever they are — whether that’s on a city tour or a sunbed. Of course, no one wants to worry about finances on their holiday, but they should’ve thought about that before they left…
Send a letter before action
If it’s been a while since your client went away and the late payment still hasn’t been sorted, it’s time to issue a letter before action (LBA). These powerful notices inform the debtor that you’ll take them to court if they don’t pay you — and usually do the trick to rectify the dispute before things get out of hand. However, you’ll need to know where to send it…
Leave it to us
As credit control experts, we provide a range of services designed to help businesses reclaim overdue invoices — including a discreet and compliant ‘no find, no fee’ debtor tracing service designed to locate runaway clients and get you the money you’re owed. Or you can use our credit control consultancy service to keep debt at bay and maintain healthy cash flow all year round…
Outsourcing your credit control is a surefire way to prevent your business’ finances from suffering this summer and beyond. Call us at 01492 22742 or email [email protected] to find out how we can help you — and ensure late payments are the least of your worries whilst on your summer holidays.