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Late Payment
risks increase
following
Brexit
Comments from Alex Littner,
Managing Director, Boost Capital
»»AT TIMES OF ECONOMIC
uncertainty Boost finds itself
not only lending to ‘boost’
investments by SMEs, but
also to ‘boost’ cash flow
when a few extra days’ starts
getting added to payment
terms.
It’s unsurprising that late
payment becomes a bigger
issue than normal when a
recession threatens. All the
advice around ‘Cash being
King’ comes into sharp focus
as consumers become a
little more cautious about
what they spend and the
cash flows into the tills a little
slower. Businesses worry that
their overdraft will get used
up, and that the bank will put
the pressure on. So invoices
stay on the to do pile rather
than moving into to the paid
drawer.
As much as Boost likes
lending, they are equally
keen to see businesses
receive payments from
debtors on time, and
encourage businesses to
adopt a five point ‘on time
payment strategy’
• Send out invoices on
time - if you are too busy
to invoice, get someone
else to do it for you.
• State clearly the date by
when the payment has
to be made - emphasise
the payment date and
steer the business into
diarising payment for a
specific day, rather than
just leaving it.
• Ensure you quote all
the references that are
required - this is the
biggest get out any
business has for not
paying. No purchase
order number, no
invoice number, no VAT
number, no bank details,
addressed wrongly.
• Send a reminder invoice
three days after the
due date - there is no
need to be aggressive.
Just send the follow
up bill just like the
major utilities do when
we don’t pay them on
time.
• Send a chaser seven
days later from
‘Collections’ - even if
you are a sole trader,
invent a member of
staff, give them a
‘Collections @’ email
address and send out
the ‘anonymous’ chaser
letter. That means you
can still maintain the
personal relationship
with your client without
offending them, but they
know they have to pay.
Particularly if Brexit does
move us to tighter economic
conditions, being focused
on debtor collection will be
key.
Construction
falls flat in the
first quarter
Construction new orders fell flat
across the first quarter of 2016,
growing by just 1% compared to
the previous quarter, with the
final figure at £15.7 billion.
»»ACCORDING TO THE
latest statistics from the
Office for National Statistics
and construction industry
analysts Barbour ABI, private
housing new orders were
at their lowest for over two
years and public sector
construction (not including
housing) totalled £1.7 billion,
its lowest quarterly figure for
more than four years.
‘One of the few
bright spots
coming from
the private
commercial
sector, which
had its highest
new orders value
for more than
18 months’
The bright spots from
the recent figures came
from office construction,
which crossed the £2 billion
mark for the first time
since the great recession
and the commercial sector
totalling £4.8 billion, up 15%
compared to a year ago.
Commenting on the
figures, Michael Dall, Lead
Economist at Barbour ABI,
said: “Construction new
orders were relatively mixed
for the first quarter of 2016
with one of the few bright
spots coming from the
private commercial sector,
which had its highest new
orders value for more than 18
months.”
“Non-housing public
sector & private housing
construction decreased in
the quarter, with the latter
by 15%, which could be
seen by many as a worry,
with the sector becoming a
fierce stalwart in sustaining
the economy and the
construction sector in
general for what has been a
significant period.”
“It is not incomprehensible
that Brexit played a role
in the flat figures across
the quarter, with the
Government as well as
private housing businesses
being reluctant to commit
to large scale construction
projects with the influence
of the referendum and the
implications it could have on
the economy still undecided.
However, it will be the
second quarter’s figures that
will be most revealing on
the influence of Brexit on
construction.”
Source: Barbour
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