The Curse of Late Payment

I’ve had a moan about this on my private blog, but it’s something that really warrants mentioning further I think.

My husband, myself,  father-in-law and brother-in-law are all self-employed or running small businesses.  We are all blessed with enough work on our books to carry us through the current economic downturn (hopefully things will pick up sooner, rather than later).  However, we have all commented on the thing that makes the current economy shaky for us:

Late payment.

When you are late paying the gas bill, they send you red letters.  When you are late paying a small business…  Well, quite frankly someone’s children are going hungry.  For most small business owners, prompt payment is a matter of survival – the work gets done promptly, so why make people wait for their money?

I have heard (particularly at this time of year) – “Oh, I’ll get it sorted out in the new year!”.  Well, it might be a nice, convenient way to forget about obligations, but the year that it happened to us, our children had a very thin holiday season.  Thankfully, they are not avaricious little rotters, but it still made me feel awful that I couldn’t provide the bounty that I had planned for, and (most importantly) my husband had done the work for, over six weeks previously.

When I have mentioned this to other small business-owners, they have all noted similar things, as well as the insidious (and unforgiveable) fact that those with the least amount of money are the best payers.  If my husband installs a new light-fitting for an elderly person or a single mother, the money is usually on the table by the time that he has finished the tea and biscuit they have made him whilst he works.  Large landowner?  Hmmm.  Don’t bargain on payment before six weeks is over.  Ooooh, it makes me cross.

I was also recently warned of an unpleasant business practice to be aware of: businesses commissioning work on liquidisable assets (plant machinery, houses, tools, etc.).  As soon as the work is completed, and the asset maximised, the company sells off the asset and then declares insolvency, and you – the contractor – are left with an unpayable invoice.  It’s just *nasty*.  I’m very, VERY glad that I was warned of this, as I suspect that we have just been offered a job on similar terms, and we know to avoid it like the plague!  The person who warned me of this has also informed me that his (large) company has also started credit checks on dubious work orders – I think this is a sign of things to come.

So, I shall be looking at our standard invoices and printing the words “All invoices to be settled in full within 7 working days or a late payment fee may be levied”.  It’s legal, and most of all – it’s *fair*.

I’m also happy to note that one of our outstanding invoices has just been settled, so we can eat again!  Hurrah!  We celebrated by  going out and buying a tonne of food at the Cash and Carry!  I now have enough custard to float a small dinghy!  Hurrah!!!!