Late payments?

38 businesses closed yesterday because of late payments.

Not because they had a bad product. Not because they lost their market. Because somebody did not pay them.

£ 11 billion. That is what late payments cost the UK economy every year. 133 million hours of staff time spent chasing money that was already earned. And right now, in this market, with costs rising and margins being squeezed from every direction, one bad debt at the wrong moment can bring down a business that has been standing for years.

I want to give you one thing this morning. Just one. Something you can action today.

It is an instruction. One simple instruction to your accounts team, or whoever handles your debt collection. And when you hear it, you will either think, good, we already do this, or you will think, why on earth have we not been doing this.

Here it is.

The next time a client rings up and asks for extra time to pay, your accounts team does not say yes, and they do not say no. They say this.

“I am sorry to hear you are going through a difficult time. I do want to help, but I have clear instructions from the directors and shareholders that I cannot authorise any extension of payment terms without a formal request going to the board. It is not something I am able to decide. What I can do is send you the paperwork you will need to complete so I can put the request in on your behalf. Would you like me to send that across — or is there a way you can make the payment within the original terms?”

Then you wait.

Now here is what happens next. And this is the part most directors never think about.

Most of them will pay.

Not because they suddenly found money they did not have. Because the moment there is a process, a form, a board to answer to, the urgency disappears, and the money appears. What they were actually doing was testing you. Seeing whether you were the easy option. The soft touch. The one who would let it slide without any fuss.

The ones who do fill out the form are probably in genuine difficulty. And now you know that early, in writing, before the situation gets any worse.*

Either way, you are no longer the last person to get paid.

Here is what I want you to remember. When a client asks you to extend their payment terms, they are asking you to lend them money. Free finance, funded by you, at a time when your own costs are going up, and your own cash flow is under pressure.

You are not a bank. You are not a money lender. You are in whatever business you are in, and that business depends on being paid for the work you do.

Your accounts team member is not saying no. They are simply following a process. There is a board. There is a procedure. It is nothing personal.

But the message is clear.

We take our payments seriously. And so should you.

The nicest person always gets paid last. The easiest person always gets paid last. I have seen it a thousand times. And I have watched good businesses go under because they were too polite to protect themselves.

One instruction. Put it in place today. Before the end of the morning.

Because 38 businesses will close tomorrow as well. Make sure yours is not one of them.

I am Mark Smillie. Have a great weekend, and I will see you on Monday.