Small businesses urged to improve their credit control
Small business owners across Llanelli are being urged to improve their credit control as the credit crunch continues to bite.
Roger Bowen who runs TaxAssist Accountants in Llanelli said: “We know this is a very sensitive issue for small businesses as customer relationships are critical, but when cashflow is being stretched to breaking point, they should seriously consider taking a firmer approach.
The call comes as latest figures show that unpaid bills owed to small businesses by their customers are at an all time high. Payments company BACS said the national figure rose by 10% in the last 12 months to more than £33 billion. The worst offenders were large companies and, according to BACS, the retail and distribution sectors were owed the most.
“Many small businesses will have to rely on their overdraft to cope with late invoice payments and they may also be paying VAT on the debt – something they won’t be able to recoup for many months if the debt does eventually go bad. And many businesses are forced to stall payments to other parties because they are waiting for payments from their customers. So late payments have lots of knock-on effects.
“Of course they will first need to consider their relationship with the customer and look carefully at their own credit management system, but they do have a statutory right to charge interest on late payments- even if it isn’t in their terms and conditions.”
The Government recently announced plans to “name and shame” large companies that fail to pay small businesses promptly, via the Cabinet Office website.
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