According to research from the Federation of Small Business (FSB), the time spent chasing late payment, and the effects of dealing with bad debt, are costing UK small and medium sized businesses an estimated 286 million man hours and nearly £3.6bn per year.

So it is not surprising that a recent study by the Institute of Directors (IoD) highlighted late payment as the greatest concern for small businesses, ahead of lack of finance and business rates.

There is legislation to protect small businesses against late payment by larger businesses. This is in the form of the Late Payment of Commercial Debts (Interest) Act that has been in force for about five years now, but it is not popular among small business owners. The Act enables them to charge late-payers interest on their debts, which is understandably not seen as the best way to endear yourself to clients.

However, there is much you can do to protect your business by clearly stating your payment terms in your Terms and Conditions when you first begin a business relationship, so that there is little room for misunderstanding. You could also consider requesting some monies on account and bill your client on a monthly or regular basis rather than issuing one final bill.

But if a bill goes unpaid for too long, sometimes there is no alternative to seeking payment through the Courts. Or if your client’s business fails, you may need to deal with the Administrator who is appointed to deal with their creditors.

In such cases, it is often best first to speak to a solicitor and get a professional opinion on your best course of action and its likely outcome.

Contact us on 01491 572138 and ask to speak to one of our commercial law specialists to organise a discussion of your situation.