Bibby Financial Services is urging the UK small business community to get tough as the late payment of business invoices reaches an all time high.

British businesses are now waiting an average of 61 days for payments according to recent research*, an all time high since the Government introduced the Late Payment of Commercial Debts Act six years ago.

The research also shows large companies can take up to 80 days before settling invoices - potentially crippling for small business owners who operate on tight margins and rely on a steady cash flow. In fact, the Federation of Small Businesses (FSB) attributes one in four small business failures to late payment.

Chief Executive of Bibby Financial Services David Robertson said, ‘Timely payment of invoices is crucial for small business owners and managers who are dependent on a healthy cash flow to keep their businesses moving forward.

‘The problem is that many small businesses are reluctant to ask larger companies to pay on time for fear of damaging relationships with key customers and ultimately losing business.

‘In reality, it is simply good business practice to pay invoices and follow up outstanding debts in a timely fashion. While it’s preferable to resolve any issues in a professional manner, small businesses should also remember the law is on their side and they do have the right to charge interest on late payments.’

In order to help small business owners and managers manage their credit control procedures more effectively and avoid falling in to the late payment trap, Bibby Financial Services has developed the following guidelines:

¥ Check it out - While winning a new customer is great for the business, check the company in question is credit worthy before you commit valuable time and resources to getting the relationship off the ground.

¥ Agree in advance - Agree terms of payment with new customers as part of the sales and contractual process. Make it clear the price of your goods and services is linked to the credit terms you offer and that you have a legal right to claim interest on late payments.

¥ Kick the Habit - Identify habitual late payers and contact them to talk through the situation. Forging good working relationships with your customers and suppliers will make it easier to resolve any payment problems when they do arise.

¥ Invoice immediately - Make sure you lead by example and get statements and invoices out on time. If you don’t do this you can’t expect to be paid on time.

¥Make it clear - Make sure your invoicing is accurate and sent to the right contact at the right address at the right time, stating clearly when payment is due.

¥Collect on time - Have a collection timetable and stick to it. If a promised cheque fails to arrive, chase it again straight away. For further piece of mind ask for a cheque number.

¥Communicate - Maintain regular and open communications with your clients and suppliers. Where possible, ensure they are made aware of any invoices due in advance to help them keep on top of payments.

¥Keep clear records - Log all correspondence with customers, including emails and telephone conversations.

¥Be upfront – Don’t be embarrassed about discussing money. Remember, if you’ve kept to your part of the deal you have the right to be paid. Be polite but firm.

¥Review procedures - Aim to run credit checks on your clients on a bi-annual basis. If the ownership of a business changes, you should reassess its creditworthiness.

¥Know the law - If you have a long outstanding payment, consider charging the client interest. As a small firm, the law gives you the right to charge interest on all late payments owed to you. The rate you can charge is the Bank of England base rate, plus eight per cent.

* Business information company Experian, April 2005

Bibby Financial Services specialises in the provision of a range of business cash flow solutions to small and medium-sized enterprises including invoice finance, export finance, trade services, asset finance, recruitment finance and a range of business support solutions across a wide range of industry sectors.

As a global services provider, Bibby Financial Services has a network of 15 operating units throughout the UK and Ireland, and overseas companies in the USA, Poland, Australia, and France, offering a local, fast and flexible approach to servicing clients.

Bibby Financial Services is wholly owned by the Bibby Line Group, a business-to-business services group with interests in ship owning and operation, shallow water accommodation, oil field services, contract logistics and business finance.

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