Guildways features in the Mail on Sunday

In the 11th April 2021 edition of the Mail on Sunday, Guildways emphasised the importance of protecting cash flow by collecting late payments quickly.

Cash flow is the life blood of any business. As Companies look to navigate their way out of lockdown with a view to post pandemic growth, it will be essential that late payments are collected quickly to protect cash flow.

All the indicators in the debt recovery industry showed that the economy was struggling before the pandemic hit. In 2015 £1.5 million claims were going through the Courts. By the end of 2019, this had increased by 30% to over £2 million claims.

Cashflow was clearly a problem for businesses because in 2015 only 47% of claims would result in a default County Court Judgment compared to 58% in 2019. County Court Judgments also known as CCJs have a significant impact on credit ratings so most businesses or individuals will seek to avoid having one therefore it is significant that by the end of 2019 58% of debtors did not appear to have the means to pay at the court claim stage.

“In our experience businesses will try to hold on to money as long as possible or alternatively they will resort to raising disputing debts to buy time. Late payment of invoices and debts has a significant impact on cash flow therefore, it is vital that businesses act quickly when collecting their debts.” says Guildways Managing Director, Michael Higgins.

When it comes to payment of your invoices, it is absolutely vital that you act quickly.

  • Create a process of sending out invoices promptly.
  • If you have the time, contact your customer prior to the invoice becoming due to double check they have your invoice and it is on their payment run.
  • Have a process where you chase late payment promptly in house for a certain period of time that you are comfortable with from a cashflow perspective and stick to that time frame.
  • Once that credit control period has ended, get it to a third party debt recovery specialist and ask them to send a letter. Guildways operates on a no collection-no fee basis and on average 86% of cases will get paid without the need for legal action.
  • 58% of business fear chasing late payment in case it upsets customers. However, Guildways has found that this is an unnecessary fear as the majority of customers will not be upset. If you have already chased your customer and warned it will be referred to a third party debt collector, they aren’t going to be surprised when they do get a letter from a Debt Collection Agency or Solicitor.
  • Some companies have an internal policy to not pay customers until they receive a letter from a Debt Collection Agency or Solicitor because it means they can keep hold of the money longer and improve their cashflow to the detriment of their customers.
  • As mentioned above 86% of cases are resolved without the need for legal action and we often see our clients continue to trade with their customers.

So in essence don’t fear chasing late payments quickly. Ensure you do it quickly because it will be absolutely imperative to whether you succeed with your roadmap to recovery.

11 Apr 2021