Getting paid

19 May 2021

Is your business getting paid on time? Some hirers tell me instances of customers demanding extra credit terms or citing reasons for delaying payment because of the pandemic.

There are also general concerns that companies might risk expanding too quickly in the wake of the current construction boom and become over-committed to bounceback loans.

Indeed, in May an Office for National Statistics survey found that 29.4% of UK businesses had cash reserves of three months or less. 

The Top Service credit reference agency, which specialises in the construction and hire industries, suggests a number of criteria to assess a company’s cash flow status. These include raising unnecessary invoice disputes, pending legal action and seeking credit terms with alternative suppliers. 

The agency also outlines balance sheet tests to check whether a company’s assets are less than its liabilities, such as continual use of an overdraft, high staff turnover or director resignations. 

Also, the Lucas Ross business rescue service has launched a Credit Services Department to help hirers recover outstanding debts from insolvent individuals or companies. 

Philip Ross from the organisation says this has proved useful in cases he has come across where a firm has utilised a number of services, racked up a lot of debt and has sought to place the business into liquidation, with thousands of insolvency notices being sent to creditors. He says that, with a general perception of poor recovery rates, these notices can often be overlooked.

Through its new service, Lucas Ross says it can handle any documentation, identify the debtor’s status, file proxies and proofs of debt on a hirer’s behalf and notify them of potential dividends. It also says that this is offered at no charge to the client.