There is very little downside to adding a late fee section to your contract and bill. It`s there if you need it and won`t hurt it if you don`t. Most clients, especially those who pay on time, will include the inclusion of a late commission or interest provision. A resilient company is a company that has an emergency plan for the most pessimistic scenario that ensures that they continue to thrive. To ensure that your business cannot be closed due to a late payment, you should consult the financial options available if payment terms are not met. This can be done in many ways, from traditional bank loans to bill financing, which could fill the gap left by late payments so you can continue to grow. It is clear that the time has come for UK SMEs to defend themselves against late payments, and these simple measures will help create an environment in which this problem is less likely to have a negative impact on your business and your health. Whether you`re hiring a lawyer or using one of the many online templates, be sure to write a clear client agreement that will avoid misunderstandings. Repeat your payment terms on each invoice. On average, businesses need more than twice as many days beyond the terms (DBT) to pay SMEs than SMEs have to pay their own bills.
This can have significant and detrimental effects on small business cash flows, so they have to wait up to a month after agreed billing terms to obtain payments. You have maintained your final agreement – providing services or delivering goods – but now your customer ignores the bill. This is an uncomfortable situation, with implications for your cash flow and customer service. You can charge late fees or interest, but make sure that the original contract that the customer signed clearly indicates all interest charges or fees that will be assessed. Look at Carillion, for example, before it collapsed earlier this year, it was a ”notorious” payment keeper who required suppliers to agree on 120-day payment terms. This may seem perfectly acceptable to large companies, but this type of black hole in a small business`s cash flow can be crippling. Designers, in fact, all contractors, should clearly communicate expectations regarding payment. Many customer contracts that I have verified and revised will have a version of this billing clause (which actually comes from the AIGA contract): Custom Planet is no stranger to late payments. Andrew talks about how you have to defend yourself. A common solution for dealing with late payments is the fee for late payments.