A lot. When it comes to businesses, cash flow is king, and late payments of commercial debt limits cash flow, and in turn, your growth and progress. Even if you finally recover this money, there are lots of other costs you will have incurred in the process, and that the invoice payment will no longer be beneficial to the company.
For a business, these costs are enormous and can add up to a far higher price than just what you see in the invoices.
Here are some actual costs to the company
We’ve created a calculator that calculates the real cost that late payments have on your business. Try it out now.
Visit the Calculator page for more information: Calculate the consequences that late payments have on your business.
Why do most large companies delay payments?
This is a puzzling issue that most people do not understand. We may not even be talking about a big company, but why do most companies love to delay payments? Here are a few reasons why;
How can I negotiate better payment terms?
If your business is in this kind of a mess, where you have more unpaid invoices than the paid ones, then it’s about time you came up with new payment terms for your customers.
There several ways you can use to negotiate for better terms with your clients, which include the following;
You can take from this information that it always pays to be prepared because late payments will undoubtedly cost you more than you know.
You may think that the total cost of a bad debt is the bad debt itself, but looking at the information above, this is just the tip of the iceberg. There is so much more to late payments that you may end up with double the original amount.
Doing due diligence before entering into a business transaction with another business is paramount to your success.
On the other hand, in business, you must always expect bad debts to occur. You should always have a bad debt account, where you can allocate a specific funds to be used to pay out the bad debts without crippling the company.
Paying out means removing money from your bad debt account and paying the overdue debt for the balance of accounts.