Do you charge interest on debts?
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• Hauliers are among the 48% of small businessmen who are unaware that under the 1998 Commercial Debts (Interest) Act they can charge 8% interest on outstanding invoices, according to research by Business Pages Small Business Watch (SBW1. It also found that a third of small businesses could face closure if debts are not paid on time, and that 5700 of them spend time every week chasing payments.
The fear of damaging relations with customers was the main reason why many companies which knew of the law would not charge interest on unpaid bills.
SBW questioned 1,200 UK companies which employ fewer than 100 people or have a turnover of less than E5m. It advises firms to fol low the following steps to reduce the risk of bad debts: • Always make thorough credit checks on potential customers.
• Get to know your customers' accounts department as well as its buyers.
• Check all invoices for accuracy before sending them out.
III Understand your customers' payment System and the dates of billing runs.
• Check the invoice has been accepted before the billing run.
III Give top priority to responding to a customers' invoice queries.
• Do everything possible to help foster good customer relations.