My wife an associate Ruth Stevenson has eloquently blogged on The Challenge of Cashflow in a Small Business, so I won’t try to re-hash all that. Recently after 5 years of pretty good cashflow I have started seeing problems with late payments from customers, which is pretty disappointing for me. I thought I would share an e-mail that I sent out to customers today – I don’t know if it will help but it’s worth a try!
I’ve been having problems recently with late payment of invoices. This means I have to spend time chasing payment, and that I don’t always get my salary payment (or payments to my suppliers/associates) on time.
Since starting my business, the average time to receive payment for invoices up until 2014 was around 20 days. The average in 2015 is now nearer 35 days (although some customers still have perfect records for paying on time, for which I am grateful). Salient Point bills most contracts in arrears on 30 day terms, so we are already expecting payment some time after work is carried out, and I don’t think further delays in payment are fair.
I would really appreciate it if you could all make sure invoices are paid promptly in future, both to make my life easier and meet the terms of our contracts.
I understand that many of Salient Point’s customers (especially startups with limited resources) may, on occasion, have logistical or cashflow difficulties in making payments. If this is the case, please contact me as soon as possible after receipt of invoice to agree an alternative payment schedule. This will allow me to plan for when the payment will arrive, and avoid wasting time chasing up payment.
Similarly if there is any question or challenge about any aspect of an invoice, please raise this with me as soon as possible after receipt of the invoice so I have the opportunity to sort it out quickly.
To try to reduce the number of invoices that are paid late without agreement or good reason, in future I will be making statutory charges on late payments in accordance with the late payment legislation, as updated in 2013 allows for statutory charges on late payments, as detailed at https://www.gov.uk/late-commercial-payments-interest-debt-recovery .
Salient Point’s policy is now as follows:
Salient Point has a policy of charging for ALL late payments in accordance with the late payment legislation (2013). This legislation allows a debt recovery charge of £40 (invoices up to £999.99), £70 (£1000 to £9999.99) or £100 (invoices over £10,000), plus interest at 8% over the Bank of England Base Rate. Salient Point will waive its statutory rights ONLY where an alternative payment schedule has been agreed in writing BEFORE payment fell overdue.
This will be printed on future invoices, and will be applied to all payments that are overdue on or after 1st October.
As always, let me know if you have any questions.