Small and medium sized enterprises (SMEs) in the UK are overlooking ways to protect against potentially crippling cash-flow problems, warns Ann Fisher of Hatchers Solicitors.
SMEs have to wait an average of 41 days longer than the time scale for payment agreed with their customers before receiving payments. Recent research shows that 37% of late payers take between one and three months to pay invoices.
With the increase in VAT to 20% expected to worsen the SME cash flow problems, Ann Fisher is urging small businesses to guard against late payment.
Ann – Commercial Business Partner said:
“Not enough businesses are aware of the protections available to them which safeguard against cash flow problems. Average commercial debts caused by late payments are high in the UK, and for SMEs a lack of cash flow can have catastrophic results. With credit less available to those businesses from banks, late payments have a far more serious consequence for SMEs.”
“Seeking protection against late payment from customers could be the difference between the business surviving or not, especially in the uncertain economic climate. A carefully worded contract drawn up by a solicitor between a business and their commercial customers can include clear terms on late payments, including penalty clauses and strict time frames for payment. Such terms can act as an effective deterrent for late payment and encourage timely payment for services, thus avoiding these terms coming into play."
For more information about how to tackle late payments please contact Ann Fisher on 01743 237695.
