There’s humour, sometimes, in the grimmest of situations. There is the old joke about some of the things you would rather do than pay your bills, including:
- Filing a tax return
- Going on a diet
- Mole removal
- Finding a cemetery spot
But late payments are not funny and can have a devastating effect on a business. More than half of small businesses (SMEs), already struggling with cash flow problems because of the pandemic, are having further problems with late or unpaid invoices.
Research carried out by Barclays on 500 SMEs shows that 58 per cent are currently waiting on late payments.
For some business owners, the stress of waiting on late payments has more than just an impact on their finances. Two fifths (39 per cent) say their mental wellbeing has suffered as a result of late payments, with over a third (34 per cent) having had sleepless nights.
This has led to Barclays and the Small Business Commissioner uniting in calling on the small business community to tackle the issue and raise the social conscience of larger businesses that don’t pay on time.
According to the research, more than half of adults in the UK would boycott businesses if they knew they were persistent late offenders.
A company’s income can be badly hit by late payments, often leading to cash flow instability.
This is where accountants can help their clients with advice and practical support. Accountancy is a business taking on more and more advisory work and an accountant can plan out courses of action to deal with late payments, which might include:
Advice on interest charging
Many new businesses don’t know they’re able to charge interest on late payments, you can advise your client on this. Through the voluntary Prompt Payment Code (PPC), businesses are able to claim late payment interest and compensation to businesses signed up to the code if they miss a payment deadline.
Offering support of business decisions
Terminating business with a persistent offender can be a difficult decision with financial implications. Therefore, sound advice and financial forecasting can inspire confidence in making that decision
While advisory work is on the rise, with more senior staff taking on the role, that may be the time for busy firms can enter a partnership with an outsourcing specialist like GI Outsourcing, which can support accountancy firm shortfalls at basic compliance level or advise on hi-tech cloud solutions.
By outsourcing services such as bookkeeping, VAT, management accounts, year end accounts and tax and payroll, firms can free up staff time to speak with clients, help them through the crisis with business advice and improve the quality of client relationships.
GI’s cloud accountancy software specialists can also advise on the best package available to suit the accountant’s needs and how it can also service their clients efficiently.
With over 22 years of experience, we’re trusted by leading accountancy firms to deliver the highest quality of work, on time, every time.
Contact our UK-based team of account managers today to find out how we can help your firm.