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Stop the late payment culture

Farmers and small businesses in the UK have urged the government to crack down on late payments which could cause untold damage to the economy.

The National Farmers Union and the Forum of Private Businesses clubbed together and sent a letter to the business minister Mark Prisk, detailing that although the governments intentions are good in terms of easing business lending, the matter of late payments needs to be tackled way before the flood gates are opened with finance.

Over £33.6 Billion is owed to Small and medium business’ according to BACS the payment company. This is the highest amount owed since a study of late payment in 2007. The Largest companies tend to be the main offenders.

Philip King, CEO of The Institute of Credit Management said  ”You have to ask, why does a supplier agree to that? 120 day terms are not good for businesses in general, and I believe it’s bad practice to accept them unless it’s really working in your interest.”

30 days is seen as the standard payment time, 60 days can really stretch a business and if asked for 120 days payment terms, companies should re consider and not enter into a contract which could take nearly half a year to pay the bills.

Despite the late payment saga Small and medium companies do have the option of using alternative funding in the form of Factoring and Invoice Discounting.

This allows the SMEs to have up front credit, despite their payment terms with their clients.

This credit can be available in 24 hours and the process of collecting and chasing payments continues, whether you would like the Factoring lender to do so, or if you choose to, you can still chase your own clients for payments.

Late payment is a difficult subject and painful for all, so when taking on a new client, the best advice is to set out your payment terms way before its time to collect the money.

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