connect

Connecting North West business to relevant training, insight, conversation and each other

Payment holiday warning

An expert in debt recovery is warning companies to be wary of giving so called payment holidays over the Christmas period.
Suzanne Dean, debt recovery manager at Lancashire law firm Napthens, said many businesses tend to ‘loosen up’ their procedures over the festive season, putting them on the back foot in the New Year.

She said many companies are happy to offer a payment holiday to customers, or an unofficial period of time during which payments won’t be chased.

However, this can lead to financial issues particularly for SMEs which may be hard pressed to dedicate staff to the extra time needed to secure these payments in the future.

Suzanne said: “Many businesses relax their normally tight credit control procedures around Christmas, often giving payment holidays or turning a blind eye to late payments, or perhaps reducing the amount owed to them as a one-off. And in sectors where customers tend to order more in the run up to Christmas, some businesses may extend credit limits.

“This can leave many in a difficult situation after the festive period, as customers may take it for granted that this lapse in procedures will continue, or that their reduced payments and extended credit limits may be repeated in the future.

“The Christmas period can be difficult for many companies anyway, as they often effectively lose a week due to holidays or customers being closed. If credit control procedures are to be loosened up at this time, make sure to prepare to tighten them again afterwards, and that staff and resources are available to do this.”