Stop Thief!

Stop Thief!

If you walked into a shop and took from the shelf a £10.00 bottle of wine, then walked out without paying and got caught, what do you think could possibly happen? If you got caught it’s up to the shop owner/manager if you get prosecuted or not. In this scenario, you get prosecuted for attempting to steal a £10.00 bottle of wine and you are now left with a criminal record. Does this sound fair to you? Let’s move on.

Stanley quotes on a painting job for Bob for the value of £2,800. Work is completed and the client is very happy with the work, even sends him personal texts saying how great the standard of work is and promises to pay the invoice tomorrow. Bob hasn’t paid his outstanding invoice but messages Stanley saying the invoice will be paid next week, then the week after. Then Bob is no longer communicating. Bob won’t answer his mobile, land line phone cuts off, there are no replies to emails or texts. Bob’s happy, he’s got work done to a very high standard and he’s feeling smug, happy that he’s got quite possibly yet another freebie. Stanley is left £2,800 down, a couple of weeks of unpaid time and unpaid high quality work and in his mind Bob is a thief who should be prosecuted just as the person who stole a £10.00 bottle of wine from a shop was. Agree?

The above invoice value for many cover vital costs such as salaries, materials costs, insurances, fuel for vans. Without this money Stanley possibly can’t get to his next job to do a quote or complete the work, he can’t go and buy materials needed, he may not be able to pay himself or anyone else that may work for him.

Non-payment of invoices has a ripple effect on people. It doesn’t ‘just’ effect a business.

If you didn’t have your salary for a month, would you manage?  Where does your salary go each month, what situation would you be in?  Can you still pay for your mortgage, car finance, buy a month’s food, pay your utilities, put fuel in your car? If you have a family that depends on you how will you pay for children’s clubs or day care, new shoes because your son/daughters current ones are now too small, school trips etc.

So, Stanley despite his best efforts and being open with his communication, and with no harsh words exchanged, keeping everything calm now faces having to go to his solicitors for a letter to be raised and a letter being sent which may lead to small claims court.  

This happens B2B not just B2P.   I hear time and time again about businesses that owe money to many trades, then fold, only to open-up trading again under another name (why this is allowed is beyond me, and that’s a whole other blog). Whoever your customer is and no matter what the amount on the invoice the non-payment of invoices can lead to cashflow problems. You may have no choice but to look at other options so that you can stay in business; a short-term loan, using credit cards, an overdraft even so that you can pay for your bills that must be paid each month.  The consideration of using a factoring company may be another option, and although it’s beneficial for cashflow reasons, your existing and paying on time clients may be offended that they are not dealing with you.

If you have health issues, the stress of this can affect your health too.

On new clients take the time to get to know them and their business, request a percentage of the invoice up front before work commences even if it’s a recommendation, who has worked for this person/business before, speak to previous suppliers if you need reassurance, look data on the  Companies House website, look at their social media (Facebook, LinkedIn, Twitter, Instagram for example) and reviews, some businesses offer Credit Checks, if it’s a large amount you may want to consider paying for them to be checked out.

I am a firm believer that every invoice you raise where everything is satisfactory should be paid. If your client does not pay you intentionally because they think they can get away with it, then they are a thief, it’s that simple.

Helpful links relating to this blog:

https://www.fsb.org.uk/media-centre/latest-news/2016/11/16/stop-late-payments-save-50-000-small-businesses

https://www.gov.uk/get-information-about-a-company