Six ways to avoid late payments over the Christmas period
Lovetts research shows that on average, 6 in 10 customers pay late at Christmas. This trend is of course likely to be exacerbated with all of the financial uncertainty that the Covid-19 crisis has created. Luckily there are steps that you can take to help mitigate this impact, and for every one of the six in ten customers who pay late over Christmas, we’ve got six ways to help you avoid a lump of coal.
It’s no secret that business slows down during the Christmas period. Offices are closed, staff are away, and paying invoices can become the furthest thing from people’s minds. This is particularly true this year, when the economic fallout from the Covid-19 crisis and subsequent period of lockdown continues to have a monumental impact on our social, psychological, and economic well-being.
But for businesses – particularly SMEs – cashflow remains imperative, and so it can be useful to head-off any festive payment slowdowns before they occur. Here, we look at six steps you can take to help protect your cashflow this Christmas:
1. Check that your customer has received the invoice
A common reason for late payment is a customer claiming that they have not received your invoice. By remaining diligent and following up on sent invoices in plenty of time, you leave the option open to resend the correspondence BEFORE the Christmas and New Year’s break.
2. Offer incentives to customers who pay in advance
Christmas is the perfect time of year to show appreciation for customers who pay on time! You could include an option on end of year invoices for prompt payers to receive a small discount.
3. Chase up overdue invoices immediately
Obviously it goes without saying that as soon as invoices fall due you should chase them up. You are entitled to this payment. Customers will often have a lot to wrap-up as they approach year end, and a small nudge can be enough to remind them of what their priorities should be.
4. Target customers with a history of late payments
Do not be afraid to be robust, especially with customers who are consistently making late payments. Companies will often have a handful of customers who are responsible for the majority of late payments, so targeting these people early is a good exercise in helping to protect cashflow.
5. Send a Letter Before Action
On average the Lovetts Letter Before Action (LBA) is effective in 86% of all cases, with no further action being required. At just £1.50 for an email version, it’s a fast, efficient way to stay on top of outstanding payments.
6. Issue Court Proceedings
Whether it is approaching Christmas or not, if pre-action correspondence has been ignored then again, you are entitled to this payment, and it is time to consider legal action. The first step here is issuing a court claim, and you can find out more here.
It’s undoubtedly been a difficult year, and of course we all operate with empathy in the current climate in understanding that many businesses are going through a tough time right now. But this understanding must work both ways, and those reading this will be well aware of how important cashflow is to their own company’s survival even in the most productive of years, let alone in the midst of a global pandemic.
Even in normal times, payment on invoices that would usually be dealt with in a timely fashion is often pushed back significantly at this time of year. In fact, Lovetts research shows that the average number of days payment is received after an invoice falls due, rises to 48 days in December, and 51 days in January.
Therefore, what a lot of the above advice boils down to, is that it’s important to be particularly proactive in your credit control and debt recovery activities prior to the onset of the festive period. We hope you found these six steps useful, and to find out more about how Lovetts can get you started in your debt recovery efforts today click here.