Properly managing your business’ cash flow is mission critical...
... if you want to stay in business. Cash flow is after-all, the ‘heart beat’ of any business. The National Federation of self-employed & small businesses’ has conducted research, which shows that ‘37% of small businesses have run into cash flow difficulties’. Therefore, unless you are very proactive when it comes to managing your cash flow, it can be a slippery slope. Not only is it a financial burden, but an emotional one as well.
Did you know that you can legally charge interest on invoices, if you do not receive payment on time?
Well thanks to the EU’s Late Payment Directive you can!
Put it this way, if you supplied to 2 businesses and owed money to both of them. 1 had late payment fees & 1 didn’t- who would you pay?
A late payment charge on invoices is an excellent way to incentivise your clients, so that you are on top of the pile, when it comes to paying their suppliers. Furthermore, it helps to establish you as a serious professional, with a business to run. If you don’t charge late payment fees, it may give the impression to late payers that they can repeatedly get away with it.
As we all know, good business is about good relationships. Therefore, it’s important that any late payments charges are explained clearly in any contract. Similarly, charges should be explained on all invoices raised.
Did you know that you can legally charge interest on invoices, if you do not receive payment on time?
The explanation of this on HMRC’s website is :
‘The interest you can charge if another business is late paying for goods or a service is ‘statutory interest’ - this is 8% plus the Bank of England base rate for business to business transactions. You cannot claim statutory interest if there’s a different rate of interest in a contract.’
In addition to this late payment charge, you can also legally claim debt recovery costs. This charge is fixed:
Amount: What you can charge:
Up to £999.99 £40
£1,000 to £9,999.99 £70
£10,000 or more £100
You must also, be aware, that you can only charge both these fees only once.