When you're running a business, late payment can be the factor which makes or breaks your plans for the future, reducing profits and taking up your time chasing them up. While late payment may be a fact of life in many industries, this guide will help you to get paid, if not always on time, as quickly as possible.
It's essential before you reach an agreement with a potential customer to check their credit rating. Have they been reliable with other suppliers, and if not, why not? If you decide to take them on, be clear about your payment terms with your customers so they know exactly when they need to pay you, and consider offering discounts as an incentive to those who pay on time.
If a customer has exceeded your payment terms, contact them and attempt to resolve the issue - find out why they haven't paid and see if you can reach an agreement. If they still don't pay up, or they are a persistent offender, get an accountant or a solicitor who specialises in debt collection involved. Alternatively, you could use the services of a debt collection agency.
It's up to you to agree payment terms with your customer, including the interest you want to charge on late payment. You have a statutory right to claim interest on late payment, which currently stands at 8% above base rate, as well as the terms you have agreed on in your contract. Whether or not you claim the interest is up to you - it's worth considering your business' relationship with the customer, though, before you do so.
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