Many businesses have suffered in the past chasing overdue invoices for months even years only to find that their business customer has filed for Liquidation or bankruptcy. This can be incredibly frustratingly and hugely detrimental to the financial health of your company. Especially when you are a small micro business who are heavily reliant on a small subset of customers.

Unfortunately there are many small businesses who go to the wall simply because a large business owed the monies which failed and took lots of local suppliers with it.

There are checks and balances which small businesses should implement in order to potentially prevent this from happening.

1. Set a Credit limit This can be increased overtime but it is always better to set reasonable credit limits and extend them incrementally higher as you gain confidence in your business customer. The longer grace period can be set the better they are at paying invoices. Never fall into the misconception that large businesses mean prompter payments. Some of the largest business in the UK have some of the worst payment terms leaving some companies high and dry for weeks, even months. Try the invoice prompt payment reporting system to view which company's are good at paying invoices and which are bad.

2. Be firm with payment terms Set your dates (advisably no later than 30 day payment terms) and be very clear that this has to be paid by the due date sending prompts and reminders along the way reminding them that the invoice is nearing due date.

3. Use an Automated Billing System it sounds harsh but if your business customer falls just 1 day late, your entitled to compensation plus interest and administrative costs. You have already provided 30 days grace period from the day your products and services were sent and received. In some cases the UK Government recommends payment within 7 days for commercial invoices and therefore 30 days is more than reasonable, especially if you have sent numerous prompts and reminders. It is certainly beneficial to automate your entire invoicing system to prevent forgetting about submitting an invoice. After all, if you want your business customer to take your payment dates seriously, you too have to be consistent in your invoicing methods.

4. Effective Credit Control vet your business customers before you engage in business. Our credit score checks can lift the lid on any unsavoury payment practices which have happened in the past so you can assess the risk proportionally.

Of course, some businesses are unscrupulous and regardless of how many tools you put in place there will always be a business transaction which leaves a bad taste however by implementing these measures will certainly limit your exposure to bad invoice payers.