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Late payments excuse warning

Late payments are continuing to have a negative impact on businesses, according to a debt recovery expert.

Suzanne Dean, debt recovery manager at Napthens solicitors, has revealed the most popular excuses for not making payment, as she warns more and more businesses are struggling to obtain unpaid debts.

Research carried out by the Asset Based Finance Association (ABFA) found small businesses in the UK are owed £67.4billion in unpaid invoices, with an average wait of 72 days for payment.

The warning comes after a recent judgement by the groceries code adjudicator (GCA) which ruled that supermarket giant Tesco had delayed payments to suppliers ‘to boost profits.’

The adjudicator found the store seriously breached the code of practice which the industry is legally obliged to follow. In some cases, suppliers reportedly had to wait two years for payments.

Suzanne Dean of Napthens warned that in her experience there were many excuses fielded by companies looking to delay payments.

‘The cheque is in the post’, ‘I have not received an invoice’, ‘the accounts department is too busy’ and ‘no purchase order number was quoted’ are some of the most popular.

Suzanne said: “Other delaying tactics include disputing the payment amount, or claiming there is no-one available to sign the cheque.”

She is now urging businesses to tackle unpaid debts at the earliest opportunity, in a bid to reduce financial pressure.

She added: “Businesses must have an effective strategy in place to enable debts to be pursued quickly and effectively. It only takes a few unpaid invoices to create problems, but if they aren’t dealt with properly this can lead to serious cashflow issues.

“However, there are ways to make the collection process easier, without jeopardising client relations. It’s vital to regularly review payment terms and ensure they are clearly outlined on invoices and in terms and conditions. That way, debtors cannot claim to be misinformed.

“Invoices must be sent promptly, and statements and reminders can be used to let debtors know exactly what they owe.

“It’s also helpful to provide alternative payment options, such as direct debit and Paypal, which can help speed up the process.”

Napthens’ Debt Recovery team offers a no recovery-no fee collection service, and provides clients with round-the-clock online access to files.