I was talking to my accountant earlier this year when I did my tax return and we got onto the subject of late payers. I have two or three of them, some debts going back more than a year. He, having hundreds of clients, has considerably more. If I'm fuming about people not paying me for services and websites rendered (and I am!), and his anger is in direct ratio to mine, I'm surprised his brain hasn't exploded.
It seems people are scared to take their money out of the bank to pay bills. Assuming they have any in there, that is, late payers hurting the cash-flow from smallest company to largest. My accountant told me of one of his clients (anonymously) who has plenty in the bank but won't pay their tax bill, preferring to leave the money earning pitiful interest, and taking a slug from the tax office of 12% interest on the balance owing. This same company owes my accountant thousands. Again they have the money in the bank but will they pay him? Will they hell! He's lucky to get $500 every couple of months from them.
He and I it seems are not alone. There is an article in today's Australian Financial Review. Read this.
Note that large businesses and government agencies are paying slower. This has a direct impact on small to medium enterprises, and considering SMEs make up to 80% of registered Australian businesses, these are dire times for all of us who own a business. Late payments trickle down the line and have the potential to put us small guys out of business.
Maybe I'm too nice. I pay my bills. On time. Including the tax man. Even if it leaves me with not much in the kitty until the next client comes along. It's the way I was brought up; the deeper into credit you get, the harder it is to get out.
The GFC may be over but believe me, we are still feeling the impact and late payers are an obvious indication.
How many of you out there with your own business are experiencing trouble with late payers? And what are you doing about it? Have you called in debt collectors or taken legal action to recover debts? Will your late payers agree to go onto a payment plan, paying you some each month, and stick to it? What's your next move? And when do you think the economy will start to recover? Answers on a postcard please (or just leave a comment).