Lovetts figures show customer invoices 99 days in the red for Q3 2015
In the third quarter of 2015, businesses appeared to relax some of their cautiousness when chasing late paying customers. While businesses are allowing over 3 months to pass between the date the invoice is issued and the threat of legal action through a Letter Before Action, the total number of days before they instruct a letter to be issued by their solicitor is shrinking marginally and firms are moving to legal claim stage much sooner. This is according to analysis of LBAs and commercial debt claims by Lovetts, the commercial debt recovery legal firm.
In Q3 2015, 99 days was the average amount of time firms were waiting after submitting an invoice before they instructed their solicitor to issue a Letter Before Action threatening legal action. This had shrunk slightly from Q2 2015 when firms were allowing over 100 days. The amount of time from LBA to claim has also shrunk by 16% to 23 days from 27 in Q2 2015.
Charles Wilson, Chairman of Lovetts said: “Since the start of the economic recovery, the number of days businesses have allowed after issuing an invoice before enlisting the help of a solicitor has steadily increased as firms looked to create stability with customers and not upset the apple cart by appearing too aggressive in their pursuit of payment. Now it seems some of this cautiousness is levelling off. However, there is still a huge job to be done in helping businesses understand that the earlier they act on late payments, the more chance they will have of securing money owed at a lower cost to themselves. An LBA can cost less than a daily newspaper but prompts payment in 84% of cases.
“A lot of it comes down to clear communication with customers, robust terms and conditions and use of late payment compensation which can incentivise prompt payment once customers understand it will cost them more if they persist in delaying.”