So, whilst FSB continues to ask Government to take measures to tackle the worst payment practices, it has now introduced a new debt recovery product to help smaller businesses and the self-employed right away. This should have a real positive benefit on a day-to-day basis, and for many this could be a lifeline. By using the service, you can expect to recover 100% of the debt owed, whilst not being charged any fees or commission.
Using the service means a free solicitor’s letter will then be sent on your behalf, which, in the majority of cases, is all it takes to receive payment. In the unlikely event that this doesn’t happen, there are further steps that can be taken.
There are strategies that you can put in place to try and curtail damage from late payments, essentially ways to minimise expenditure whilst maximising income. For example, ensuring your cash flow forecast is a true reflection of what you really need and thinking creatively about how you could minimise expenditure. For example, could you lease, borrow – or even share – equipment, rather than investing in your own? Think about utilising networking organisations to pool ideas and get inspiration. FSB Connect is the UK’s biggest business networking group, and is free to join.
You could put aside around 30% of revenue for tax, to avoid being hit later. This could also be used as a contingency fund to help ease the situation in the short term in the event of late payments. Also make sure that your terms and conditions are very clearly set out at the beginning of your invoices. Keep across all your invoices and chase them even ahead of your maximum payments terms. Check what date of the month when the pay run is for your payee and check that your invoice met this after you submitted it.
The majority of late payments (84%) to small businesses and the self-employed are more than two weeks late, with an average delay of about six weeks. It’s worth being aware that large businesses are the most likely to pay late – 61% of late payments are from large private firms.
Late payment has been a huge and debilitating problem for smaller businesses for too long. Whilst FSB, as the UK’s biggest business group representing small businesses and the self-employed continues to ask the Government to tackle the worst payment practices, we’ve introduced this new product to empower small businesses and the self-employed to recover their debts in the most simple and effective way possible so they can focus on running and growing their businesses.
As the UK’s biggest business support group, FSB’s focus is both on successfully engaging with Government and opposition parties to make important policy decisions, whilst offering effective tools, advice and benefits that have a positive impact on the day-to-day lives of small business owners and the self-employed.
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