45
PRO INSTALLER OCTOBER 2015
PRO BUSINESS
@proinstaller1
Late payments and
how to deal with
them effectively
Bivek Sharma, Head
of Small Business
Accounting at KPMG
For entrepreneurs in the construction industry working all hours to
grow their business and innovate,
late payments are presenting an
increasingly big problem. This on
going Catch 22 sees business owners needing their customers to give
them more orders without wanting
to harass them – but they need
their cash as well, to survive.
So what’s the answer?
Firstly, prevention is better than the cure,
so although you’ll no doubt be delighted
to see your new customer’s first order, you
need to be sure they’re credit worthy. First
and foremost, a good indication of your
new client’s reliability is to agree terms
for the exchange up front, then you can
endeavour to get your first invoice paid
on time, sending the right signs to the
customer and helping to make sure you’ll
be paid quickly for any on going work.
Make it clear you will apply the European
Directive on late payment, which allows
you to claim interest, and your customer
should know you’re in business.
Secondly, you might want to consider
insurance; it can be costly, but can be necessary too. Getting a quote from a credit
insurer will often reveal which customers
are at risk and make sure your ‘all monies’
retention of title claim is on your orders,
so if the worst happens, you can retrieve
your product quickly.
Consider the simple stuff
It may seem obvious, but chasing in
advance of payment dates makes it more
likely that when the time comes, you can
expect the balance in full, or you can
identify any unexpected offsets ahead of
time, noting any queries in monies and
helping you maintain a good cash flow.
Email reminders and requests for email
receipts are a great way to help you
begin to balance the books in this case,
and mean you have all invoices stored
together.
Thinking about your original agreements
with the customer, it’s also a good idea
to include in your standard terms and
conditions of sale, a clause for charging
for Proof of Delivery copies, guaranteeing
your customer has received goods purchased and that you are owed payment.
If you’ve taken all measures but your
customer is still paying late, talk to them.
Determining why they are paying late
means you can both find a way to resolve
the situation; good communication with
your customer is key for avoiding late
payments.
OK, so you’ve done all the
above, but you’ve still got a
late payer. What do you do?
Again - talk to the customer and ask
immediately why. Sometimes there’s a
dissatisfaction issue that has not been
communicated or resolved, which can
be frustrating, but if so, deal with it then
chase for payment, making sure to get a
promise of a date. This way, if they miss it
you can increase the pressure justifiably.
Failing this, consider getting in tou