Unpaid & Outstanding Invoices Recovery | Only 52% of Invoices paid on time!!

Just 52% of invoices sent during 2017 were paid on time or within three days of payment deadlines, according to research by accountancy software firm FreeAgent.

But as Claire Sandbrook weighs in on the conversation, we wonder, will appointing a board member make a measurable difference to the little guy?

Claire believes, late payment needs to be tackled, in her personal view, by the entire leadership team of a business. In our team we make the credit control function part of the conversation with existing customers. We soon find out what’s happening and customers appreciate the heads up on sorting out invoices and getting them paid.

Scottish freelancers & small businesses lifeline? Large companies to appoint late-payment tsar

The government says that every large company must make a board member responsible for late payments to SMEs and freelancers, and they need to report on progress in annual reports.

Giving his Spring Statement in the House of Commons, Chancellor Philip Hammond announced that the business secretary has been tasked to see the move through. The Chancellor said that a non-executive director should be responsible for the supply chain through the audit committee of every large business, and report back through the annual report on progress.

Nearly half of Britain’s micro businesses suffer from chronic late payments from clients. Just 52 per cent of invoices sent during 2017 were paid on time or within three days of payment deadlines, according to research by accountancy software firm FreeAgent.

Over 50,000 businesses go bust each year because of late payment, which depresses the economy by about £2.5 billion. And there are around £500 billion worth of unpaid invoices currently in the UK.

Shergroup offers small businesses a lifeline…that isn’t dependent on waiting for big businesses to get their act together!

So what can be done at ground-level, legislation and significant penalties to reduce late payments, and the risk of unpaid invoices.

1. Get your Terms & Conditions right in the first instance: Submit your current Terms and Conditions for a FREE review to ensure you are covered and most importantly, in the event that you need to take further action, you’re covered and the costs of collection and enforcement are borne by the debtor, and not you!

2. Put a comprehensive Onboarding Process in place which includes a Credit Check on your Customers All too often, we’re so pleased to be taking on a new client, we don’t do enough due diligence to ensure we are offering the right levels of credit to stay protected. Company Credit Check Submission

3. Chase up late payments quickly We offer a full collections service on a No Win No Fee basis Call us today to discuss your requirements 0845 890 9200

4. Reduce credit terms for businesses that keep paying late Manage the credit limits you make available to your clients by using our Credit Monitoring Service.

5. Build strong relationships with your customers, so you improve the likelihood of getting paid first!

Have you been a Victim of Unpaid Invoices?  Join our LinkedIn Group ‘Unpaid Anonymous’ and come share your war stories with us!

Frequently Asked Questions – Late Payments & Invoice Collection

Q1: What percentage of invoices are paid on time in the UK?

A: According to research by accountancy software firm FreeAgent, just 52% of invoices sent during 2017 were paid on time or within three days of payment deadlines. This means that nearly half of all invoices were paid late, creating significant cash flow problems for businesses. Nearly half of Britain’s micro businesses suffer from chronic late payments from clients. This widespread problem affects businesses of all sizes, with small businesses and freelancers being particularly vulnerable to the financial strain caused by late-paying clients.

Q2: How much money do UK businesses lose due to late payments?

A: Over 50,000 businesses go bust each year because of late payment, which depresses the economy by about £2.5 billion annually. Currently, there are around £500 billion worth of unpaid invoices in the UK at any given time. This massive amount of money tied up in unpaid invoices creates significant cash flow problems throughout the economy, affecting businesses’ ability to pay their own suppliers, invest in growth, and maintain operations. The economic impact extends beyond individual businesses to affect the entire UK economy.

Q3: What is the government’s late payment tsar initiative?

A: The UK government announced that every large company must appoint a board member responsible for late payments to SMEs and freelancers, who must report on progress in annual reports. Chancellor Philip Hammond announced in his Spring Statement that the business secretary was tasked with implementing this measure. A non-executive director should be responsible for the supply chain through the audit committee of every large business and report back through the annual report on progress. This initiative aims to tackle the chronic late payment problem affecting small businesses and freelancers by making large companies accountable at board level.

Q4: Will appointing a board member really solve late payment issues for small businesses?

A: As Claire Sandbrook weighs in on the conversation, the question remains whether appointing a board member will make a measurable difference to small businesses. Claire believes that late payment needs to be tackled by the entire leadership team of a business, not just one board member. While the government initiative is a step in the right direction, real change requires a cultural shift throughout organizations. Shergroup offers small businesses a lifeline that isn’t dependent on waiting for big businesses to get their act together, providing practical solutions that work today rather than relying on large companies to change their payment practices.

Q5: How should businesses approach credit control with customers?

A: Claire Sandbrook recommends making the credit control function part of the ongoing conversation with existing customers. At Shergroup, they find that proactive communication helps them discover what’s happening with customers early on. Customers actually appreciate the heads-up on sorting out invoices and getting them paid. Rather than waiting until invoices are overdue, businesses should integrate credit control into regular customer relationship management. This approach maintains positive relationships while ensuring payment issues are addressed promptly before they become serious problems.

Q6: Why is it important to have proper Terms and Conditions?

A: Getting your Terms and Conditions right in the first instance is crucial for several reasons. Proper T&Cs ensure you are legally covered, particularly in the event that you need to take further action for non-payment. Most importantly, well-drafted Terms and Conditions can ensure that the costs of collection and enforcement are borne by the debtor, not you, saving your business significant expenses. Shergroup offers a FREE review of current Terms and Conditions to ensure businesses are properly protected. Without proper T&Cs, businesses may find themselves unable to recover collection costs even when they successfully recover the debt.

Q7: Should businesses conduct credit checks on new customers?

A: Yes, businesses should put a comprehensive onboarding process in place which includes a credit check on new customers. All too often, businesses are so pleased to be taking on a new client that they don’t do enough due diligence to ensure they are offering the right levels of credit to stay protected. A proper credit check helps you understand the financial stability of potential customers, their payment history, and any existing debts or county court judgments against them. This information allows you to make informed decisions about credit limits and payment terms, protecting your business from unnecessary risk before extending credit to new clients.

Q8: What should businesses do when invoices become overdue?

A: Businesses should chase up late payments quickly rather than waiting and hoping the customer will pay. Shergroup offers a full collections service on a No Win No Fee basis, meaning businesses don’t pay unless the debt is successfully recovered. Quick action is essential because the longer an invoice remains unpaid, the harder it becomes to collect. Early intervention also signals to customers that you take payment seriously, which can encourage faster payment on future invoices. Prompt follow-up maintains professionalism while protecting your cash flow and demonstrating that late payment is not acceptable.

Q9: How can businesses manage repeat late payers?

A: For businesses that keep paying late, you should reduce credit terms to protect your business from ongoing risk. Shergroup recommends managing the credit limits you make available to clients by using their Credit Monitoring Service. This allows you to track customer payment behavior over time and adjust credit terms accordingly. Customers who consistently pay late should have their credit limits reduced or be required to pay upfront or on delivery. This approach protects your business while sending a clear message that late payment has consequences, potentially encouraging better payment behavior.

Q10: What is Shergroup’s No Win No Fee debt collection service?

A: Shergroup offers a full collections service on a No Win No Fee basis, meaning businesses only pay if the debt is successfully recovered. This arrangement removes the financial risk from pursuing unpaid invoices, as businesses don’t have to pay upfront fees or hourly rates for collection attempts. If Shergroup doesn’t recover the debt, the business doesn’t pay for the service. This makes professional debt collection accessible to small businesses that might otherwise be unable to afford legal or collection services. To discuss your requirements, businesses can call Shergroup at 020 3588 4240.

Q11: What is a comprehensive onboarding process for new customers?

A: A comprehensive onboarding process for new customers should include several key steps to protect your business from payment risks. First, conduct a credit check on the customer to assess their financial stability and payment history. Review and ensure they accept your Terms and Conditions clearly outlining payment terms, late payment charges, and your rights to recover debts. Verify business details and contact information. Set appropriate credit limits based on their creditworthiness. Establish clear communication channels and payment procedures. Document everything in writing. This thorough approach helps prevent payment problems before they start by ensuring you only extend credit to customers who can realistically pay.

Q12: How does late payment affect small businesses differently than large companies?

A: Small businesses and freelancers are particularly vulnerable to late payments because they typically have smaller cash reserves and fewer financial resources to absorb the impact of unpaid invoices. While a large company might weather a late payment, the same delay can cause a small business to miss payroll, be unable to pay suppliers, or even go out of business entirely. Nearly half of Britain’s micro businesses suffer from chronic late payments. Small businesses also have less bargaining power to demand better payment terms from larger clients. The £500 billion in unpaid invoices across the UK disproportionately affects smaller businesses that depend on timely payment for survival.

Q13: What can businesses do while waiting for government initiatives to take effect?

A: Rather than waiting for big businesses to get their act together following government initiatives, small businesses can take immediate action. Get your Terms and Conditions reviewed (Shergroup offers FREE reviews), implement a comprehensive onboarding process with credit checks on new customers, chase up late payments quickly using professional collection services, reduce credit terms for repeat late payers, use credit monitoring services to manage client credit limits, build strong relationships with customers to improve payment likelihood, and consider No Win No Fee collection services to remove financial risk. These ground-level actions provide immediate protection while large-scale changes take time to implement.

Q14: Why is building strong customer relationships important for getting paid?

A: Building strong relationships with your customers improves the likelihood of getting paid first when they have cash flow constraints. Customers who value their relationship with you are more likely to prioritize your invoices when they have limited funds. Strong relationships also facilitate open communication about payment issues, allowing you to work together to resolve problems before they escalate. As Claire Sandbrook notes, making credit control part of the conversation with existing customers helps businesses find out what’s happening early, and customers appreciate the heads-up on sorting out invoices. Good relationships transform payment from a confrontational issue into a collaborative process.

Q15: What is the economic impact of late payments on the UK economy?

A: Late payments depress the UK economy by about £2.5 billion annually. Over 50,000 businesses go bust each year because of late payment, representing lost jobs, tax revenue, and economic productivity. The £500 billion worth of unpaid invoices currently outstanding in the UK represents money that could otherwise be circulating through the economy, being invested in growth, or used to pay other businesses and employees. This creates a ripple effect throughout the supply chain, with businesses unable to pay their own suppliers on time, perpetuating the cycle of late payment. The government’s late payment tsar initiative aims to address this systemic economic problem.

Q16: What should be included in business Terms and Conditions regarding payment?

A: Business Terms and Conditions should clearly specify payment terms including the number of days for payment (e.g., 30 days from invoice date), late payment penalties and interest charges in accordance with UK law, your right to suspend services for non-payment, the customer’s responsibility for collection costs and legal fees if enforcement becomes necessary, currency and payment methods accepted, what constitutes acceptance of the terms, and dispute resolution procedures. Properly drafted T&Cs should comply with the Late Payment of Commercial Debts (Interest) Act 1998, which allows businesses to charge interest and recovery costs on late payments. Shergroup offers FREE reviews to ensure your Terms and Conditions provide maximum protection.

Q17: How does credit monitoring help manage late payment risk?

A: Credit monitoring services help businesses manage late payment risk by continuously tracking customers’ financial health and payment behavior. Shergroup’s Credit Monitoring Service allows businesses to manage the credit limits they make available to clients based on current financial information. The service alerts you to changes in customers’ creditworthiness, such as new CCJs, declining credit scores, or insolvency proceedings, allowing you to adjust credit terms before payment problems occur. This proactive approach helps businesses identify high-risk customers early, reduce exposure to bad debts, and make informed decisions about extending credit. Regular monitoring is essential because a customer’s financial situation can change rapidly.

Q18: What is the “Unpaid Anonymous” LinkedIn group?

A: “Unpaid Anonymous” is a LinkedIn group created by Shergroup where businesses can share their experiences with unpaid invoices. The group provides a community where business owners, freelancers, and finance professionals can discuss their “war stories” about late payments and debt recovery. This peer support network allows members to share strategies, learn from others’ experiences, discuss solutions to common problems, and realize they’re not alone in facing late payment challenges. The group serves as both a support network and an educational resource for businesses dealing with the frustration and financial impact of unpaid invoices.

Q19: What penalties and legislation exist to reduce late payments?

A: The UK has several legal measures to combat late payments, including the Late Payment of Commercial Debts (Interest) Act 1998, which allows businesses to charge interest on late payments at Bank of England base rate plus 8% for business-to-business transactions. Businesses can also claim reasonable debt recovery costs. The government’s new initiative requiring large companies to appoint a board member responsible for late payments adds accountability at the corporate level. Additionally, businesses can include contractual penalties in their Terms and Conditions. However, as Claire Sandbrook notes, legislation alone isn’t enough—significant penalties need to be enforced, and businesses need practical tools like credit monitoring, professional collections, and strong Terms and Conditions to protect themselves.

Q20: How can Shergroup help businesses with unpaid invoices?

A: Shergroup offers comprehensive solutions for businesses dealing with unpaid invoices, including FREE Terms and Conditions review to ensure legal protection and ensure collection costs are borne by debtors; Company Credit Check services to assess new customer creditworthiness before extending credit; No Win No Fee debt collection services, meaning you only pay if the debt is successfully recovered; Credit Monitoring Services to manage client credit limits and track payment behavior; professional enforcement services as High Court Enforcement Officers with heritage dating back to 1780; and support through the “Unpaid Anonymous” LinkedIn community. Businesses can call 020 3588 4240 to discuss their specific requirements and receive expert guidance on protecting their cash flow and recovering unpaid invoices.