More than half of the UK’s small and medium-sized businesses suffer from late payments.

In a recent survey of senior decision-makers from European SMEs, 52% claimed that they have failed to meet commitments due to slow payment processing. 54% stated that their company had been forced to take out a loan as a result of missing payments that disrupted cash flow.

As well as impacting cash flow, late payments can be a drain on time and resources used to chase up unpaid invoices. In extreme cases, businesses can find themselves struggling to survive.

How can you mitigate and manage late payments?

There are some steps you can take to alleviate late payments and manage debt recovery efficiently:

Due diligence—carry out credit checks on new clients.

Negotiate credit terms—make sure your prospective client agrees to the terms in writing.

Effective invoice systems—automated invoicing can be efficient, but when a payment has not been received, make immediate contact with the client.

Review late payers—don’t accept late payment as being inevitable. Monitor outstanding invoices closely and take action.

If late payments are impacting your cash flow

Early communication is critical if your business struggles with cash flow due to late payments. It allows more of a degree of flexibility in finding a solution.

• If you think you might have a cash flow problem, talk to your bank immediately.
• If you can’t pay a supplier on the due date, talk to them as soon as you know you cannot do so.

If your business has clients who are late with their payments, you can contact the Small Business Commissioner (SBC) for help with getting the issue resolved.

Protect against the risks of unpaid invoices

Trade credit insurance protects against the risk of non-payment by your debtors for services rendered or goods sold on credit. Primarily a tool for protection, it can also be a tool for growth, improving and unlocking access to financing. It can help mitigate risks before they materialise.

Here to help

Learn more about trade credit insurance and how it can help protect your business.

Arrange a meeting with your Marsh Commercial account executive to discuss any of the points raised in this email or learn more about our menu of risk management services.

Contact Leah Gregory on 07385 482545 or email leah.gregory@marshcommercial.co.uk.