According to a recent article on the Smallbusiness.co.uk website, the Bacs Payment Schemes Limited (Bacs) have revealed that out of 1.7 million small to medium enterprises in the UK, more than a third of them have to wait to receive payment beyond their agreed terms of payment. Almost forty percent of companies are spending hours each week chasing late payments owed by their customers.
Automated payments are one solution to the problem, but may not always be viable. I must admit that in my own business where part of a regular service I offer provides two options for payment, I have found that regular automated monthly payments to be more reliable and require less administration than invoicing on an annual basis.
If you run a company which can offer an automated payment plan then it would be worth providing this as an option for your customers. Another way to reduce the possibility of late payments is to make it clear in your payment terms and conditions that interest will be added on late payments at the highest possible rate as allowed by law. This is particularly relevant on business to business transactions. The current 'statutory' interest rate allowed in the UK is 8% plus the Bank of England base rate. However, you can’t claim statutory interest if there’s a different rate of interest in a contract.
You can find more information about Late commercial payments and charging interest and debt recovery on the gov.uk website.