The coronavirus (COVID-19) crisis is shaking up the global economy, leaving many business-owners worried about the future. It stands to reason that people are likely to treat current circumstances by acting with caution.
Reduced spending is never a good sign. So why could it be catastrophic for companies that are owed money by their customers?
“In the world of manufacturing, late payments aren’t unusual,” explains Jan Firth, of Firths. “In fact, it seems to have become the standard for many of the companies that manufacturers work with,”
But with everything that’s going on, how could late payments pose additional, significant risks to a business’ future?
“As a result of the current economic climate, there’s a chance that many manufacturers will continue to have orders cancelled or postponed, which can really affect their pipeline and, in turn, their cash flow”
Jan Firth, Firths
Insulation Against Economic Uncertainty
“If you’ve got a lot of debt at the back end of a pipeline, the most vital time to focus on collecting it is quieter at the front end,” continues Jan. “If you don’t, then everybody is going to go under.”
“Delayed payments can damage businesses in more ways than one,” Jan continues. “It costs time and money to continuously chase overdue invoices.”
“Also, if a company that owes you money goes into administration, or fails completely, it’s likely to take months before the debt is resolved – if you get anything at all.”
“Cashflow is king, so the worst thing you can do is put off debt collection until things really get out of control”
Jan Firth, Firths
“As an independent business, we always prioritise the service and support that our team delivers to our clients,” Jan concludes. “I think that if everybody helps everybody else, then we will get through this period of uncertainty.”
If your business is owed money, and you don’t have the time (or want) to keep chasing late payments, call Firths on 01706 941 400 or visit firthlaw.co.uk.
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