Firms urged to improve credit practice before it’s too late
Failing to confirm credit terms in writing could be leaving your business open to late payment
Too many small businesses are leaving themselves wide open to late payment by failing to agree credit terms in advance, it was claimed today.
The Better Payment Practise Group (BPPG), an organisation that works to improve the UK’s bad payment culture, has revealed that not enough companies are providing their customers with credit terms in writing before they start working with them.
Failure to provide customers with set credit terms encourages late payment and prevents businesses being able to impose penalties and claim interest on overdue invoices.
What’s more, there’s the hidden danger that the customer can impose their terms instead. There is a little-known legal precedent that the last party to present their terms before the goods or services are supplied is the one whose terms are applied to that contract.
A survey conducted by the BPPG in November revealed that nearly a quarter of small businesses never confirm their credit terms in writing to customers.
Roy Ayliffe, a BPPG member representing the Chartered Institute of Purchase and Supply, urged business owners to make it their New Year’s Resolution to do so in the future or risk major cashflow problems.
“Businesses are shooting themselves in the foot by not agreeing terms up front. It leaves their cashflow open to the abuse of late payers,” said Ayliffe.
“Agreeing terms must be top priority for all businesses and should be top priority for all businesses and should be as much of a part of the contract negotiation process as delivery terms, service and price.”
More information on credit terms is available on the BPPG website, www.payontime.co.uk