Late payments from clients can be both irritating and exhausting. The constant chasing of invoices can result in stressed staff, time-wasting and issues with finance distribution. It is believed that the average company spends an hour and a half each day chasing invoices; which is seven and a half hours a week; in short, a day a week is lost from chasing payments.
This is a problematic area for many businesses and with almost £50bn owed to companies, it can become detrimental all round for the smaller businesses who are owed the money. Smaller businesses and self-employed workers are the ones to struggle greater. Should you have four outstanding invoices, this can equate to almost £1000. To many that could be a monthly wage.
The Problem Can Be a Little Too Big to Handle
This is becoming an increasingly difficult problem to combat. The more invoices are left to be settled, the further behind they become in catching up on payments. It means that many wait much longer than the settled sixty-day payment period. The capital city has proven to be the most difficult, with an average of seven outstanding invoices; which take up an average of two hours daily. Chasing payment for two hours or more deviates from the worker’s other tasks. This can cause workers to become behind on their tasks.
It is believed that the government has pledged to look deeply into the logistics behind late payments. This has aims to combat the issue. The problem is that the manifesto was pushed out by Whitehall. There is still no implemented law to stop it.
The problem can cripple smaller businesses. The need to create new laws is fast approaching as more companies strive to change the government’s mind. It is also believed that the lack of invoice payments can cripple companies financially, leading to the need to borrow money. Seeking professional advice and using reputable firms to loan from is a good solution but the cause of the problem should also be looked into.
Why Aren’t Invoices Paid On Time?
The reason behind companies not paying can differ but these reasons do not provide any comfort to the people on the receiving end. The reasons that they don’t pay are usually not because they are unhappy with service, but could be related to the lack of manpower, technology for financial reasons that means they want the money in their bank account for longer. Some companies may ask for a deposit for larger sums of money before the work is provided. This isn’t always a viable option and if the invoices are smaller. Before the work is completed, it may not be beneficial for the client to pay up a portion of the money.
Even signed contracts requesting payment within a certain time often do not provide any weight, therefore it’s vital to ensure that you are always equipped with enough finances each month to ensure you are not stretched too thin and missing out on new business opportunities or unable to pay any staff.
