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Would you believe it, I’ve been writing this column for a year? Looking back over my articles, I’ve been on a wonderful journey: from Bahamian islands and local pantos to the sun-kissed fields of Glastonbury. I’ve given you an insight into what lands on my desk, wars over the office air conditioning and my personal pride in judging the Wiltshire Business of the Year and Gloucestershire and Wiltshire Law Society legal excellence awards. The one topic I’ve yet to write about is something I deal with day in, day out: late payments, a huge problem for many of my clients and, I’m sure, businesses throughout the Wiltshire region.
The total number of UK retail businesses to have gone bust this year is more than 20, already half the total for the whole of 2018. April saw the retail world take yet another blow, with Debenhams joining House of Fraser and Toys 'R' Us as the latest high street stalwart to enter administration. I admit, I had to take a moment when I heard the news. For many, Debenhams evokes memories of wading through the jumble of “blue cross sale” items, seeking out those great sartorial bargains. While punters like me might feel a pang of sadness at the thought of the chain’s demise, even more emotionally disturbed will be Debenhams’ suppliers.
Suppliers are usually the last to know when their customer is going under, but there are some telltale signs that they can look out for. The biggest is probably delayed payments. Chances are, if you notice payments taking longer (with no credible reason offered), your customer might be in trouble. My advice would be: don’t extend their credit, stick to cash terms and carry out some credit checks.
But while a ‘glass half full’ kind of gal, I’m also pragmatic. Why not protect your business before problems start? The best way to guarantee against the perils of late (or non) payment is putting robust terms and conditions (T&Cs) in place. Think about security: if it’s a new business, get a parent or director guarantee. What about terms entitling you to get your product back? Put a good credit control system in place too. Make sure your terms include penalties for late payment (a good deterrent if ever there was one).
Whatever your feelings on the EU, the Late Payment Act certainly did businesses a favour in this regard. Because of it, business-to-business contracts can benefit from enhanced interest, compensation and fee recovery. You can take advantage of this right, using it to make the recovery of your outstanding payments more powerful and self-financing.
And you know what - it’s never too late. If you don’t have protections like T&Cs in place already, you can draw them up now. But don’t forget to get explicit written agreement from your customer. Equally important if the terms aren’t met is to use them to protect your business from further damage. We have the power to break the retail domino effect, one contract at a time!
#justsaying