IMPROVE YOUR CASH FLOW
Chafes Press Release PR128-2 : 18 January 2008
In today’s uncertain economic climate it is essential for businesses to operate an effective credit control system and reduce the amount of time for which profit is “locked-up” in unpaid invoices.
Implement a pro-active procedure.
- Invoice as soon as the job is completed to discourage your customer in delaying making payment.
- When the invoice becomes due for payment, chase your customer. A polite call can be very effective.
- If the invoice is unpaid for more than 30 days beyond your credit terms, inform your customer that payment is required immediately or you will take formal action.
If formal action is required, instruct a solicitor to send a formal Letter Before Action. If it doesn’t result in payment, then discuss with your solicitor the debt recovery options and the costs involved.
You can and should seek interest on any unpaid invoices.
- At the outset of a contract, agree that a commercial rate of interest will be applied to any unpaid invoices.
- Under the Late Payment of Commercial Debts (Interest) Act 1998, interest can be charged on business to business debts at a rate fixed every six months, and a fixed sum of £40 - £100 to cover enforcement costs.
- The Court can award interest on a judgment debt, currently at a rate of 8% per annum.
For more advice contact Chafes Solicitors who provide efficient and cost-effective debt recovery services whatever the amount of payment you are pursuing.
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